[Federal Register Volume 71, Number 186 (Tuesday, September 26, 2006)]
[Rules and Regulations]
[Pages 56008-56027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-8194]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1300, 1309, 1310, 1314

[Docket No. DEA-291I]
RIN 1117-AB05


Retail Sales of Scheduled Listed Chemical Products; Self-
Certification of Regulated Sellers of Scheduled Listed Chemical 
Products

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Interim final rule with request for comment.

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SUMMARY: In March 2006, the President signed the Combat Methamphetamine 
Epidemic Act of 2005, which establishes new requirements for retail 
sales of over-the-counter (nonprescription) products containing the 
List I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine. 
The three chemicals can be used to manufacture methamphetamine 
illegally. DEA is promulgating this rule to incorporate the statutory 
provisions and make its regulations consistent with the new 
requirements. This action establishes daily and 30-day limits on the 
sales of scheduled listed chemical products to individuals and requires 
recordkeeping on most sales.

DATES: Effective Dates: September 21, 2006, except that Sec. Sec.  
1314.20, 1314.25, and 1314.30 (with the exception of Sec.  
1314.30(a)(2)) are effective September 30, 2006. Section 1314.30(a)(2) 
is effective November 27, 2006.
    Comment Date: Written comments must be postmarked on or before 
November 27, 2006.

ADDRESSES: To ensure proper handling of comments, please reference 
``Docket No. DEA-291I'' on all written and electronic correspondence. 
Written comments being sent via regular mail should be sent to the 
Deputy Administrator, Drug Enforcement Administration, Washington, DC 
20537, Attention: DEA Federal Register Representative/ODL. Written 
comments sent via express mail should be sent to DEA Headquarters, 
Attention: DEA Federal Register Representative/ODL, 2401 Jefferson-
Davis Highway, Alexandria, VA 22301. Comments may be directly sent to 
DEA electronically by sending an electronic message to 
<a href="/cdn-cgi/l/email-protection#4b2f2e2a652f223d2e3938222425653b24272228320b3e382f2421652c243d"><span class="__cf_email__" data-cfemail="97f3f2f6b9f3fee1f2e5e4fef8f9b9e7f8fbfef4eed7e2e4f3f8fdb9f0f8e1">[email protected]</span></a>. Comments may also be sent 
electronically through http://www.regulations.gov using the electronic 
comment form provided on that site. An electronic copy of this document 
is also available at the http://www.regulations.gov Web site. DEA will 
accept attachments to electronic comments in Microsoft word, 
WordPerfect, Adobe PDF, or Excel file formats only. DEA will not accept 
any file format other than those specifically listed here.

FOR FURTHER INFORMATION CONTACT: Mark W. Caverly, Chief, Liaison and 
Policy Section, Office of Diversion Control, Drug Enforcement 
Administration, Washington, DC 20537; telephone: (202) 307-7297.

SUPPLEMENTARY INFORMATION: 

DEA's Legal Authority

    DEA implements the Comprehensive Drug Abuse Prevention and Control 
Act of 1970, often referred to as the Controlled Substances Act (CSA) 
and the Controlled Substances Import and Export Act (21 U.S.C. 801-
971), as amended. DEA publishes the implementing regulations for these 
statutes in Title 21 of the Code of Federal Regulations (CFR), Parts 
1300 to 1399. These regulations are designed to ensure that there is a 
sufficient supply of controlled substances for legitimate medical, 
scientific, research, and industrial purposes and to deter the 
diversion of controlled substances to illegal purposes. The CSA 
mandates that DEA establish a closed system of control for 
manufacturing, distributing, and dispensing controlled substances. Any 
person who manufactures, distributes, dispenses, imports, exports, or 
conducts research or chemical analysis with controlled substances must 
register with DEA (unless exempt) and comply with the applicable 
requirements for the activity. The CSA as amended also requires DEA to 
regulate the manufacture and distribution of chemicals that may be used 
to manufacture controlled substances illegally. Listed chemicals that 
are classified as List I chemicals are important to the manufacture of 
controlled substances. Those classified as List II chemicals may be 
used to manufacture controlled substances.
    On March 9, 2006, the President signed the Combat Methamphetamine 
Epidemic Act of 2005 (CMEA), which is Title VII of the USA PATRIOT 
Improvement and Reauthorization Act of 2005 (Pub. L. 109-177). DEA is 
promulgating this rule as an interim final rule rather than a proposed 
rule because the changes being made codify statutory provisions, some 
of which are already in effect. Parts of the statute are self-
implementing; certain changes related to retail sales became effective 
upon signature (March 9, 2006), others

[[Page 56009]]

became effective on April 8, 2006, and still others will become 
effective September 30, 2006. An agency may find good cause to exempt a 
rule from certain provisions of the Administrative Procedure Act (APA) 
(5 U.S.C. 553), including notice of proposed rulemaking and the 
opportunity for public comment, if it is determined to be unnecessary, 
impracticable, or contrary to the public interest. Many of the 
requirements of the Combat Methamphetamine Epidemic Act of 2005 
included in this rulemaking were set out in such detail as to be self-
implementing. Therefore the changes in this rulemaking provide 
conforming amendments to make the language of the regulations 
consistent with that of the law. DEA is accepting comments on other 
aspects of this rulemaking, particularly those not specifically 
mandated by the Combat Methamphetamine Epidemic Act of 2005.

Combat Methamphetamine Epidemic Act of 2005

    The Combat Methamphetamine Epidemic Act of 2005 (CMEA) amends the 
CSA to change the regulations for selling nonprescription products that 
contain ephedrine, pseudoephedrine, and phenylpropanolamine, their 
salts, optical isomers, and salts of optical isomers. CMEA creates a 
new category of products called ``scheduled listed chemical products.'' 
Ephedrine, pseudoephedrine, and phenylpropanolamine are List I 
chemicals because they are used in, and important to, the illegal 
manufacture of methamphetamine. Products containing these List I 
chemicals also have legitimate medical uses. Ephedrine is used in some 
products for treating asthma. Pseudoephedrine, a decongestant, is a 
common ingredient in cold and allergy medications. In November 2000, 
the Food and Drug Administration (FDA) issued a public health advisory 
concerning phenylpropanolamine and requested that all drug companies 
discontinue marketing products containing phenylpropanolamine due to 
risk of hemorrhagic stroke. In response, many companies voluntarily 
reformulated their products to exclude phenylpropanolamine. 
Subsequently, on December 22, 2005, FDA published a Notice of Proposed 
Rulemaking (70 FR 75988) proposing to categorize all over-the-counter 
nasal decongestants and weight control drug products containing 
phenylpropanolamine preparations as Category II, nonmonograph, i.e., 
not generally recognized as being safe for human consumption. Most 
products containing phenylpropanolamine intended for humans have been 
withdrawn from the market, but phenylpropanolamine is still sold by 
prescription for veterinary uses.
    Under previous CSA amendments (the Comprehensive Methamphetamine 
Control Act of 1996 (MCA) and the Methamphetamine Anti-Proliferation 
Act of 2000 (MAPA)), Congress limited the quantity of products 
containing ephedrine, pseudoephedrine, and phenylpropanolamine that 
could be sold as nonprescription drugs at retail (which were, along 
with certain liquid products, defined as ``ordinary over-the-counter 
pseudoephedrine or phenylpropanolamine products'') without 
recordkeeping, but generally exempted products sold in blister packs 
sold by ``retail distributors''. The MCA established thresholds for 
these drug products, including a threshold of 24 grams of combination 
ephedrine products; single-entity ephedrine products had been regulated 
by the Domestic Chemical Diversion Control Act of 1993 (Pub. L. 103-
200). MAPA reduced existing thresholds for pseudoephedrine and 
phenylpropanolamine to 9 grams per transaction, with each package 
containing not more than 3 grams of pseudoephedrine base or 
phenylpropanolamine base, but retained the so-called ``blister pack'' 
exemption. Because most retail outlets did not want to create and 
maintain records of sales or register as a retail distributor, the 
threshold for recordkeeping functioned for practical purposes similarly 
to a sales limit. Much of the product was also sold in blister packs.
    Congress determined that the existing limits were not sufficient to 
prevent people from buying these products and using them to illegally 
manufacture methamphetamine. In the Combat Methamphetamine Epidemic Act 
of 2005, Congress adopted provisions that do the following:
    <bullet> Limit the quantity of each of the chemicals that may be 
sold to an individual in a day to 3.6 grams of the chemical, without 
regard to the number of transactions.
    <bullet> For nonliquids, limit packaging to blister packs 
containing no more than 2 dosage units per blister. Where blister packs 
are not technically feasible, the product must be packaged in unit dose 
packets or pouches.
    <bullet> Require regulated sellers to place the products behind the 
counter or in locked cabinets.
    <bullet> Require regulated sellers to check the identity of 
purchasers and maintain a log of each sale that includes the 
purchaser's name and address, signature of the purchaser, product sold, 
quantity sold, date, and time.
    <bullet> Require regulated sellers to maintain the logbook for at 
least two years.
    <bullet> Require regulated sellers to train employees in the 
requirements of the law and certify to DEA that the training has 
occurred.
    <bullet> For mobile retail vendors and mail order sales, require 
sellers to limit sales to an individual in a 30-day period to 7.5 
grams.
    <bullet> For individuals, limit purchases in a 30-day period to 9 
grams, of which not more than 7.5 grams may be imported by means of a 
common or contract carrier or the U.S. Postal Service.
    The numbers of dosage units and milliliters (mL) that may be 
purchased under the sales limits are shown in Table 1 below. As noted 
previously, the FDA issued a voluntary recall on phenylpropanolamine 
products as being unsafe for humans so no phenylpropanolamine over-the-
counter (OTC) product should be available for human consumption. 
Veterinary use is by prescription only.

  Table 1.--Number of Tablets/Milliliters That Equal Retail Transaction
         Limits (as Base) for Scheduled Listed Chemical Products
------------------------------------------------------------------------
                                                Transaction limits
   Scheduled listed chemical product    --------------------------------
                                           3.6 gm     7.5 gm     9.0 gm
------------------------------------------------------------------------
                                                      Tablets
------------------------------------------------------------------------
Ephedrine:
    25 mg Ephedrine HCl................        175        366        439
    25 mg Ephedrine Sulfate............        186        389        466
Pseudoephedrine (as HCl):

[[Page 56010]]

 
    30 mg Pseudoephedrine HCl..........        146        305        366
    60 mg Pseudoephedrine HCl..........         73        152        183
    120 mg Pseudoephedrine HCl.........         36         76         91
Pseudoephedrine (as Sulfate):
    30 mg Pseudoephedrine Sulfate......        155        324        389
    60 mg Pseudoephedrine Sulfate......         77        162        194
    120 mg Pseudoephedrine Sulfate.....         38         81         97
    240 mg Pseudoephedrine Sulfate.....         19         40         48
------------------------------------------------------------------------
                                                   Number of mL
------------------------------------------------------------------------
Ephedrine:
    6.25 mg/5 ml Ephedrine HCl.........      3,515      7,323      8,788
Pseudoephedrine (as HCl):
    15 mg/1.6 mL Pseudoephedrine HCl...        468        976      1,171
    7.5 mg/5 mL Pseudoephedrine HCl....      2,929      6,103      7,323
    15 mg/5 mL Pseudoephedrine HCl.....      1,464      3,051      3,661
    15 mg/2.5 mL Pseudoephedrine HCl...        732      1,525      1,830
    30 mg/5 mL Pseudoephedrine HCl.....        732      1,525      1,830
    30 mg/2.5 mL Pseudoephedrine HCl...        366        762        915
    60 mg/5 mL Pseudoephedrine HCl.....        366        762        915
------------------------------------------------------------------------

Provisions of CMEA

    Overview. Before CMEA, requirements for sales of products 
containing ephedrine, pseudoephedrine, and phenylpropanolamine, which 
were then called regulated drug products or drug products regulated 
pursuant to 21 CFR 1300.02(b)(28)(i)(D), distinguished between in-
person sales to a purchaser (retail distribution) and mail order sales, 
which covered any sale where the product is shipped using the Postal 
Service or any common or private carrier. Mail order sellers had to 
file monthly reports with DEA if they sold a purchaser drug products 
containing more than a threshold quantity (9 grams for pseudoephedrine 
and phenylpropanolamine (maximum per package of 3 grams), 24 grams for 
ephedrine combination products), regardless of how the products were 
packaged. Retailers conducting face-to-face transactions had to 
maintain records for sales above the same thresholds except that, as 
noted above, sales of products in blister packs generally were not 
covered. The status of such sales was discussed in detail in an 
interpretive rule (69 FR 2862, January 14, 2004; corrected at 69 FR 
3198, January 22, 2004). Either type of seller had to register with DEA 
if they sold the products to individuals in amounts above the threshold 
quantity. Only two persons are registered as retail distributors.
    The CMEA provisions on retail sales create differing requirements 
for the various types of retail sales. As discussed further below, 
Table 2 summarizes the applicability of the CMEA provisions as well as 
existing DEA provisions to the different types of sellers.

                               Table 2.--Summary of Requirements by Type of Seller
----------------------------------------------------------------------------------------------------------------
                                          Regulated sellers
                                               (store)           Mobile retail  vendors     Mail order sellers
----------------------------------------------------------------------------------------------------------------
Daily sales limit....................  3.6 gm/chemical........  3.6 gm/chemical........  3.6 gm/chemical.
30-day sales limit...................  .......................  7.5 gm.................  7.5 gm.
Blister packs........................  Yes....................  Yes....................  Yes.
Storage..............................  Behind the counter       Locked cabinet.........  NA.
                                        Locked cabinet.
Logbook..............................  Yes....................  Yes....................  NA.
Customer ID..........................  Examine photo ID.......  Examine photo ID.......  Verify ID.
Train employees......................  Yes....................  Yes....................  NA.
Self-Certify.........................  Yes....................  Yes....................  NA.
Notice of misrepresentation..........  Yes....................  Yes....................  NA.
Monthly reports......................  No.....................  No.....................  Yes.
Theft and loss reports...............  Yes....................  Yes....................  Yes.
----------------------------------------------------------------------------------------------------------------

    CMEA defines nonprescription drug products containing ephedrine, 
pseudoephedrine, or phenylpropanolamine as ``scheduled listed chemical 
products.'' Direct, in-person sales to a customer, whether at a 
permanent store or movable site (e.g., kiosk, flea market), are subject 
to new requirements for training of employees who take part in the sale 
of scheduled listed chemical products and certification to DEA that the 
employees have been trained. These sellers, called ``regulated 
sellers'' in CMEA, must also check photo identifications of purchasers 
and maintain specific records of each sale of scheduled listed chemical 
products. Under CMEA, the

[[Page 56011]]

only sales exempt from recordkeeping are sales of single packages of 
pseudoephedrine where the package contains not more than 60 milligrams. 
DEA will issue future guidance to further clarify remaining questions 
about how regulated entities may meet this regulation's training 
requirements.
    The recordkeeping and reporting requirements for mail order sales 
basically remain the same as under the previous regulations, except 
that a waiver in the prior law that covered non face-to-face 
distributions by retail distributors has been eliminated for scheduled 
listed chemical products. As a result, retail stores that deliver these 
products to customers by mail or delivery services will need to comply 
with the provisions for mail order sales reporting for these 
transactions. Mail order sellers must file monthly reports with DEA. 
CMEA adds the requirement that these sellers verify the purchaser's 
identity prior to shipping.
    As noted above, CMEA changes the limits on retail sales. Daily 
sales are now limited to a maximum of 3.6 grams of each chemical in 
scheduled listed chemical products. Mobile retail vendors and mail 
order vendors must also limit sales to an individual purchaser to 7.5 
grams of each chemical in scheduled listed chemical products in any 30-
day period. CMEA limits purchases by an individual purchaser to 9 grams 
of each chemical in scheduled listed chemical products in any 30-day 
period, not more than 7.5 grams of which may be imported by means of a 
private or commercial carrier or the U.S. Postal Service. Any imports 
of scheduled listed chemical products subject to the 7.5 gram purchase 
limit under CMEA must also otherwise comply with all other applicable 
Federal and State laws regarding their importation, including the 
Federal, Food, Drug, and Cosmetic Act. This provision is not included 
in this rule, but will be addressed in other rulemakings DEA is 
promulgating to implement the various provisions of the Combat 
Methamphetamine Epidemic Act of 2005. Finally, CMEA exempts all retail 
sellers and mail order distributors selling the products at retail from 
registration. The following sections discuss each of the statutory 
provisions in more detail.
    Definitions. CMEA revises the definition of ``regulated 
transaction,'' adds several new definitions, and removes the definition 
of ``ordinary over-the-counter pseudoephedrine or phenylpropanolamine 
product.'' CMEA adds a definition of ``scheduled listed chemical 
product,'' which means any nonprescription product that contains 
ephedrine, pseudoephedrine, or phenylpropanolamine and is marketed 
lawfully under the Federal Food, Drug, and Cosmetic Act. References to 
ephedrine, pseudoephedrine, or phenylpropanolamine include their salts, 
optical isomers, and salts of optical isomers. CMEA exempts scheduled 
listed chemical products sold at retail by a regulated seller or by 
persons that sell the product for personal use and ship the product by 
mail or private or common carriers (mail order sellers) from the 
definition of regulated transaction. It also removes other references 
to the sale of these chemicals in drug products from the definition of 
regulated transactions. DEA notes that further clarification regarding 
regulated transactions will be addressed in a separate rulemaking. 
These changes remove retail sellers and mail order sellers from the 
registration system; in practice, retail and mail order sellers have 
not registered because they limited sales to below threshold quantities 
and to products sold in blister packs. At present, only two persons are 
registered as retail distributors.
    CMEA adds definitions of ``regulated seller,'' to mean a retail 
distributor (including a pharmacy and mobile retail vendors), and ``at 
retail,'' to mean sale or purchase for personal use. It also revises 
the definition of ``retail distributor'' to remove the sentence 
referring to below threshold quantities. This change subjects all 
sales, except for sales of single packages containing not more than 60 
milligrams of pseudoephedrine, to recordkeeping requirements.
    Sales limits. Effective April 8, 2006, CMEA limits sales to an 
individual to 3.6 grams per day of each chemical in scheduled listed 
chemical products regardless of the number of purchases. Mobile retail 
vendors and mail order sellers may not sell an individual more than 7.5 
grams of each chemical in scheduled listed chemical products in a 30-
day period. A seller who violates these provisions is subject to civil 
penalties and possible criminal penalties.
    Purchase limits. CMEA imposes a 9 gram purchase limit in a 30-day 
period on individuals. Not more than 7.5 grams of the 9 grams may be 
imported by means of common/contract carrier or the U.S. Postal 
Service. Any imports of scheduled listed chemical products subject to 
the 7.5 gram purchase limit under CMEA must also otherwise comply with 
all other applicable Federal and State laws regarding their 
importation, including the Federal, Food, Drug, and Cosmetic Act. This 
provision is not included in this rule, but will be addressed in other 
rulemakings DEA is promulgating to implement the various provisions of 
the Combat Methamphetamine Epidemic Act of 2005. In other rulemakings 
based on new CMEA provisions, imports, other than this 30-day 
individual limit, are limited to DEA registrants that have been issued 
a quota to import. (These rulemakings will be separately published in 
the Federal Register.) A purchaser who violates these limits is subject 
to criminal penalties.
    Thirty-day limit. CMEA creates a 30-day sales limit. DEA interprets 
this to mean a rolling calendar where the sales limit is based on sales 
to the purchaser in the previous 30 days. DEA interprets the per day 
limit to refer to midnight to midnight, not a rolling 24-hour clock.
    Blister packs. Effective April 8, 2006, nonliquid forms of 
scheduled listed chemical products (including gel capsules) must be 
sold only in blister packs, with no more than two dosage units per 
blister unless blister packs are technically infeasible. In that case, 
the dosage units must be in unit dose packets or pouches.
    Product placement: Behind counter or locked cabinet. CMEA requires 
that on and after September 30, 2006, scheduled listed chemical 
products must be stored behind the counter or, if in an area where the 
public has access, in a locked cabinet. Although DEA is not including 
cabinet specifications in the rule, a locked cabinet should be 
substantial enough that it cannot be easily picked up and removed. In a 
store setting, the cabinet should be similar to those used to store 
items, such as cigarettes, that can be accessed only by sales staff.
    Logbooks. CMEA requires retail sellers to maintain logbooks on and 
after September 30, 2006. If a retailer maintains the logbook on paper, 
DEA is requiring that the logbook be bound, as is currently the case 
for records of sales of Schedule V controlled substances that are sold 
without a prescription. Bound blank logbooks and ledger books meeting 
DEA's regulatory requirements are readily available on the commercial 
market. If the logbook is maintained electronically, the records must 
be readily retrievable by the seller and any DEA or other authorized 
law enforcement official. Logs must be kept for two years from the date 
the entry was made. The logs must include the information entered by 
the purchaser (name, address, signature, date, and time of sale) and 
the quantity and form of the product sold.
    Where the record is entered electronically, the computer system may 
enter the date and time automatically. An electronic signature system, 
such as

[[Page 56012]]

the ones many stores use for credit card purchases, may be employed to 
capture the signature for electronic logs. The information that the 
seller must enter may be accomplished through a point-of-sales system 
and bar code reader.
    DEA is aware that in some cases, such as pharmacy counters where 
the computer is behind the pharmacy counter, it may be difficult for 
the purchaser to enter the information electronically. DEA is seeking 
comments on whether systems currently used to capture signatures for 
credit or debit card purchases can be reprogrammed to allow customers 
to enter name and address, as well as the signature. DEA also 
recognizes that some purchasers will find it difficult or impossible to 
enter the information themselves. In these cases, the seller should ask 
for the name and address and enter it, rather than simply copy it off 
the photo ID. Regardless of how the information is entered, however, 
there must be a mechanism to allow the customer to sign the logbook.
    Verification of photo ID. CMEA requires on and after September 30, 
2006, that an individual must present an identification card that 
includes a photograph and is issued by a State or the Federal 
government or a document considered acceptable under 8 CFR 
274a.2(b)(1)(v)(A) and (B). Those documents currently include the 
following:
    <bullet> United States passport (unexpired or expired).
    <bullet> Alien Registration Receipt Card or Permanent Resident 
Card, Form I-551.
    <bullet> An unexpired foreign passport that contains a temporary I-
551 stamp.
    <bullet> An unexpired Employment Authorization Document issued by 
the Immigration And Naturalization Service which contains a photograph, 
Form I-766; Form I-688, Form I-688A, or Form I-688B.
    <bullet> In the case of a nonimmigrant alien authorized to work for 
a specific employer incident to status, an unexpired foreign passport 
with an Arrival-Departure Record, Form I-94, bearing the same name as 
the passport and containing an endorsement of the alien's nonimmigrant 
status, so long as the period of endorsement has not yet expired and 
the proposed employment is not in conflict with any restrictions or 
limitations identified on the Form I-94.
    For individuals 16 years of age or older:
    <bullet> A driver's license or identification card containing a 
photograph, issued by a State or an outlying possession of the United 
States. If the driver's license or identification card does not contain 
a photograph, identifying information shall be included such as: Name, 
date of birth, sex, height, color of eyes, and address.
    <bullet> School identification card with a photograph.
    <bullet> Voter's registration card.
    <bullet> U.S. military card or draft record.
    <bullet> Identification card issued by Federal, State, or local 
government agencies or entities. If the identification card does not 
contain a photograph, identifying information shall be included such 
as: Name, date of birth, sex, height, color of eyes, and address.
    <bullet> Military dependent's identification card.
    <bullet> Native American tribal documents.
    <bullet> United States Coast Guard Merchant Mariner Card.
    <bullet> Driver's license issued by a Canadian government 
authority.
    For individuals under age 18 who are unable to produce a document 
from the list above of acceptable documents for persons age 16 years 
and older:
    <bullet> School record or report card.
    <bullet> Clinic doctor or hospital record.
    <bullet> Daycare or nursery school record.
    The list of acceptable forms of identification, as cited in CMEA, 
may change (``in effect on or after the date of enactment''). DEA has 
no discretion to alter the list.
    Notice on misrepresentations. CMEA requires that on and after 
September 30, 2006, the logbooks include a notice to purchasers that 
entering false statements or misrepresentations may subject the 
purchaser to criminal penalties under section 1001 of title 18 of the 
U.S. Code. DEA is requiring the inclusion of the following language in 
all logbooks:

    Warning: Section 1001 of Title 18, United States Code, states 
that whoever, with respect to the logbook, knowingly and willfully 
falsifies, conceals, or covers up by any trick, scheme, or device a 
material fact, or makes any materially false, fictitious, or 
fraudulent statement or representation, or makes or uses any false 
writing or document knowing the same to contain any materially 
false, fictitious, or fraudulent statement or entry, shall be fined 
not more than $250,000 if an individual or $500,000 if an 
organization, imprisoned not more than five years, or both.

    With both a bound logbook and electronic log, inclusion of this 
notice may present difficulties. If the purchaser is not able to enter 
the information electronically in a store, providing the notice 
electronically will not meet the requirements. If not feasible in these 
situations, one alternative is that the seller prominently display the 
notice where the purchaser will see it when entering or providing the 
information.
    Verification of identity for mail order sales. The Controlled 
Substances Act (21 U.S.C. Sec.  830(b)(3)) requires that each regulated 
person, as defined in the Act, who engages in a transaction that 
involves ephedrine, pseudoephedrine, or phenylpropanolamine (including 
drug products containing these chemicals) and uses or attempts to use 
the Postal Service or any private or commercial carrier shall, on a 
monthly basis, submit a report of each transaction conducted during the 
previous month to DEA. Data contained in the report includes, but is 
not limited to: Name of purchaser; quantity and form of ephedrine, 
pseudoephedrine, or phenylpropanolamine purchased; and the address to 
which such ephedrine, pseudoephedrine, or phenylpropanolamine was sent. 
DEA has specified further information regarding mail order reports by 
regulation (21 CFR 1310.05).
    CMEA requires that effective April 8, 2006, the mail order seller 
confirm the identity of the purchaser prior to shipping the product. 
CMEA requires DEA to establish procedures for this identity 
verification by regulation. To parallel the identification requirements 
for regulated sellers, and to provide reasonable assurance that the 
person purchasing the product is who they claim to be, DEA is requiring 
that mail order sellers verify the identity of the purchaser by 
obtaining a copy of an identification card that includes a photograph 
and is issued by a State or the Federal government or a document 
considered acceptable under 8 CFR 274a.2(b)(1)(v)(A) and (B). Such a 
copy may be obtained through use of the Postal Service, facsimile 
transmission of a photocopy, or the scanning and transmission of the 
identification card, among other examples. The mail order seller must 
determine that the name and address on the identification card 
correspond to the name and address provided to the mail order seller as 
part of the sales transaction. If the information cannot be confirmed, 
the seller may not ship the items.
    Selling at retail. CMEA requires that on and after September 30, 
2006, a regulated seller must not sell scheduled listed chemical 
products unless it has self-certified to DEA, through DEA's Web site. 
The self-certification requires the regulated seller to confirm the 
following:
    <bullet> Its employees who will be engaged in the sale of scheduled 
listed chemical products have undergone training regarding provisions 
of CMEA.
    <bullet> Records of the training are maintained.
    <bullet> Sales to individuals do not exceed 3.6 grams of ephedrine, 
pseudoephedrine, or phenylpropanolamine per day. (Mobile

[[Page 56013]]

retail vendors must also confirm that sales to an individual in a 30-
day period do not exceed 7.5 grams.)
    <bullet> Nonliquid forms are packaged as required.
    <bullet> Scheduled listed chemical products are stored behind the 
counter or in a locked cabinet.
    <bullet> A written or electronic logbook containing the required 
information on sales of these products is properly maintained.
    <bullet> The logbook information will be disclosed only to Federal, 
State, or local law enforcement and only to ensure compliance with 
Title 21 of the United States Code or to facilitate a product recall.

The seller must train its employees and self-certify before either the 
seller or individual employees may sell scheduled listed chemical 
products. The self-certification is subject to the provisions of 18 
U.S.C. 1001. A regulated seller who knowingly or willfully self-
certifies to facts that are not true is subject to fines and 
imprisonment.

    Training. DEA has developed training that it has made available on 
its Web site (http://www.deadiversion.usdoj.gov). Employers must use 
the content of this training in the training of their employees who 
sell scheduled listed chemical products. An employer may include 
additional content to DEA's, but DEA's content must be included in the 
training. For example, a regulated seller may elect to incorporate 
DEA's content into initial training for new employees.
    Training records. On and after September 30, 2006, each employee of 
a regulated seller who is responsible for delivering scheduled listed 
chemical products to purchasers or who deals directly with purchasers 
by obtaining payment for the scheduled listed chemical products must 
undergo training and must sign an acknowledgement of training received 
prior to selling scheduled listed chemical products. This record must 
be kept in the employee's personnel file.
    Self-certification. On and after September 30, 2006, the regulated 
seller must self-certify to DEA as described above. DEA has established 
a Web page that will allow regulated sellers to complete the self-
certification on-line and submit it to DEA electronically. A self-
certification certificate will be generated by DEA upon receipt of the 
application. The regulated seller will print this self-certification 
certificate, or if the regulated seller is unable to print it, DEA will 
print and mail the certificate to the self-certifier. The regulated 
sellers will be classified into three categories: Chain stores that are 
currently controlled substance registrants, chain stores that are not 
registrants, and individual outlets. Chain stores wishing to file self-
certifications for more than 10 locations will have to print or copy 
the form electronically and submit the information to DEA by mail. DEA 
will work with these persons to facilitate this process. Persons 
interested in this self-certification option should contact DEA for 
assistance. For current DEA registrants, the system will pre-populate 
the form with basic information.
    Because CMEA specifically states that a separate self-certification 
is required for each separate location at which scheduled listed 
chemical products are sold, mobile retail vendors must self-certify for 
each location at which sales transactions occur. This self-
certification for locations is required even if the same person or 
persons sell at each of the different locations.
    DEA requests comments on who should be authorized to sign the self-
certification for the regulated seller. The person should be in a 
position to know that all employees who require training have been 
trained and that the retail outlet is complying with all other 
requirements and should be authorized to sign documents for the 
regulated seller.
    Time for self-certification. CMEA requires that regulated sellers 
self-certify by September 30, 2006. Although CMEA appears to link self-
certification to training of each individual who will deliver the 
products to customers, the high rate of employee turnover in the retail 
sector could require frequent submissions of self-certifications if the 
regulated seller needed to recertify each time a new employee is 
trained. DEA, therefore, will require regulated sellers to self-certify 
by September 30, 2006. When regulated sellers file the initial self-
certification, DEA will assign them to groups. Each group will have an 
expiration date that will be the last day of a month from 12 to 23 
months after the initial filing. After the second self-certification, 
regulated sellers will be required to self-certify annually. It is the 
responsibility of the regulated seller to ensure that all employees 
have been trained prior to self-certifying each time. It is also the 
responsibility of the regulated seller to ensure that they self-certify 
before the self-certification lapses. DEA requests comments on annual 
self-certifications versus certifications whenever new employees are 
trained or quarterly self-certification.
    Fee for self-certification. In a separate Notice of Proposed 
Rulemaking, DEA is proposing that regulated sellers who are not DEA 
registrants pay a fee for self-certification. While DEA is not making 
this fee effective with this Interim Rule, DEA is providing background 
discussion and rationale for this decision here so that all persons 
will be aware of this issue.
    Section 886a of the CSA defines the Diversion Control Program as 
``the controlled substance and chemical diversion control activities of 
the Drug Enforcement Administration,'' which are further defined as the 
``activities related to the registration and control of the 
manufacture, distribution and dispensing, importation and exportation 
of controlled substances and listed chemicals.'' The CSA also states 
that reimbursements from the Diversion Control Fee Account ``* * * 
shall be made without distinguishing between expenses related to 
controlled substances activities and expenses related to chemical 
activities.'' [Pub. L. 108-447 Consolidated Appropriations Act of 
2005].
    In addition, Section 111(b)(3) of the Departments of Commerce, 
Justice, and State, the Judiciary, and Related Agencies Appropriations 
Act of 1993 (Pub. L. 102-395), codified at 21 U.S.C. 886a(3), requires 
that ``fees charged by the Drug Enforcement Administration under its 
diversion control program shall be set at a level that ensures the 
recovery of the full costs of operating the various aspects of that 
program.''
    CMEA implements new requirements governing the sale of scheduled 
listed chemical products, defined as nonprescription drug products 
containing ephedrine, pseudoephedrine, or phenylpropanolamine. CMEA 
requires self-certification for all regulated sellers of scheduled 
listed chemical products. CMEA also exempts retail distributors from 
registration requirements under the CSA; however, in practice, retail 
distributors have not previously registered with DEA because they 
limited their sales to below threshold quantities and to products sold 
in blister packs.
    DEA considers the self-certification requirements of the CMEA to 
fall within the legal definition of control as governed by Section 886a 
of the CSA (see above). Accordingly, these activities fall under the 
general operation of the Diversion Control Program and are subject to 
the requirements of the Appropriations Act of 1993 that mandates that 
fees charged shall be set at a level that ensures the recovery of the 
full costs of operating the various aspects of the Diversion Control 
Program. The self-certification requirements of CMEA fall under these

[[Page 56014]]

``various aspects.'' Therefore, in its Notice of Proposed Rulemaking, 
DEA will propose to charge a fee for each self-certification to comply 
with these statutory requirements.
    DEA is proposing, in its separate Notice of Proposed Rulemaking, 
that the fee for self-certification will cover all associated costs, 
including the initial one-time costs of setting up the self-
certification program, Web site, and programmatic infrastructure, as 
well as ongoing costs associated with the provision of self-
certifications, call center support, maintenance of the self-
certification system, printing costs for certificates that regulated 
sellers cannot print, financial management, and other related costs. 
DEA must establish a program to train its employees to provide 
information regarding, and accept, self-certifications and must 
establish the infrastructure necessary for the program. Required 
systems include creation of history, renewal cycles, investigative 
tools, business validation rules, and development and maintenance of 
the self-certification Web site.
    In its Notice of Proposed Rulemaking, DEA is proposing that when 
regulated sellers submit a self-certification online via the DEA self-
certification Web site that they pay a fee by credit card at the time 
of self-certification. DEA calculated this fee based on estimated set-
up costs in Fiscal Year 2006 ($117,198) and Fiscal Year 2007 operating 
costs ($1,624,443) totaling $1,741,641, as shown below in Table 3. The 
initial systems development and set-up costs will not be repeated in 
subsequent years. The operational and maintenance costs for Fiscal Year 
2008 are estimated to be $1,099,782. Total annual costs associated with 
operating the self-certification process include staff costs, 
operational and administrative costs, Web hosting, monitoring and 
maintenance costs (including hardware and software maintenance), and 
annual inflation adjustments. Therefore, DEA will propose in its 
separate Notice of Proposed Rulemaking, that the 89,000 persons DEA 
estimates will self-certify with the Administration would pay a self-
certification fee of $32 for the Fiscal Year 2006 through Fiscal Year 
2008 period.
    To calculate the fee, DEA divided the total costs for Fiscal Years 
2006 through 2008 by the anticipated population of affected regulated 
sellers of 89,000. DEA estimates 89,000 current retail vendors of 
scheduled listed chemical products. All costs are shown in the table 
below for Fiscal Years 2006 through 2008. The self-certification costs 
reflect the cost per each self-certification per each facility as 
required by CMEA.

                             Table 3.--Self-Certification Costs and Fee Calculation
----------------------------------------------------------------------------------------------------------------
                     Project detail                          2006 *         2007          2008       Total cost
----------------------------------------------------------------------------------------------------------------
Planning \1\............................................        $3,029       $36,343       $37,002       $76,373
Design, Development, Deployment \2\.....................        43,512       703,863        71,662       819,037
Call center, Finance, Mail room, Printing \3\...........        59,253       711,034       723,916     1,494,203
Maintenance \4\.........................................        11,405       173,203       176,341       360,949
Enhancements \5\........................................  ............        90,861        90,861
                                                         -------------------------------------------------------
    Total...............................................       117,198     1,624,443     1,099,782     2,841,423
                                                         =======================================================
Population..............................................  ............        89,000        89,000  ............
Cost per certification..................................  ............  ............  ............        31.92
----------------------------------------------------------------------------------------------------------------
\1\ Planning is the costs to the government to plan the development, design, and implementation of the self-
  certification online system. This item is the costs of three percent of the time used by five government
  employees to supervise and manage software development.
\2\ Design, development and deployment of the online self-certification system represents the cost to pay
  contract programmers, web designers, system administrators and database administrators to design, develop, and
  deploy the new application. These costs include testing and quality assurance of the new software and
  establishment of new security controls. The self-certification system will be designed with business
  validation rules and provide investigative tools to ensure compliance with the new legislation.
\3\ Call Center, finance, mail room and printing represent the following costs.
<bullet> DEA currently operates a registration Call Center. Based on current Call Center customer service
  representative costs, this item includes the cost of the additional time required to respond to inquiries
  regarding the CMEA self-certification program. DEA provides call center assistance to approximately 400,000
  persons annually. DEA estimates that CMEA will increase that population by 89,000 persons, a 23% increase.
<bullet> DEA currently operates a registration Finance Center. Based on current Finance Center employee costs,
  this item includes the cost of the additional time required to process fees collected from CMEA self-
  certifications.
<bullet> DEA currently operates a registration Mail Room. Based on current Mail Room clerical costs, this item
  includes cost of employee time for handling and mailing out of CMEA self-certification certificates if the
  self-certifier is unable to print the certificate.
<bullet> DEA currently operates a Printing and Mailing Facility. Based on current Printing Costs, this item
  includes paper, toner, envelope, and postage costs to mail out the CMEA self-certification certificates.
\4\ Maintenance. This item includes all employee salaries, hardware maintenance, and software license costs
  associated with the daily operation of the self-certification system.
\5\ Enhancements. This item is the enhancement of the system to add the ability to maintain a history of changes
  to records and to allow for yearly renewal of records.
* 2006 is for 1 month of operations.

    To minimize administrative and collection burdens, it is DEA's 
policy to round to the nearest dollar when calculating fees. The annual 
self-certification fee will be clearly defined on the self-
certification Web site. However, in setting this fee DEA notes that it 
is based on assumptions about the total number of regulated sellers who 
will be required to self-certify. Should the total number of regulated 
sellers be significantly more or less than 89,000, DEA may adjust the 
self-certification fee as appropriate through future rulemakings. In 
any case, DEA will not exceed its operating budget as authorized by 
Congress.
    In implementing this fee, DEA also notes that many of the affected 
regulated sellers are already registered with DEA to dispense 
controlled substances and therefore already pay a registration/
reregistration fee to DEA. While these existing registrants are 
required by the CMEA to self-certify with DEA if selling scheduled 
listed chemical products, in its Notice of Proposed Rulemaking, DEA is 
proposing that the self-certification fee be waived upon submission of 
an active DEA registration number.
    Other DEA activities associated with self-certification and 
compliance with CMEA include enforcement and judicial proceedings. CMEA 
gives DEA the authority to prohibit a regulated seller

[[Page 56015]]

from selling scheduled listed chemical products for certain violations 
of CMEA. If DEA issues an order to a regulated seller prohibiting that 
regulated seller from selling scheduled listed chemical products, the 
regulated seller is entitled to an administrative hearing if the seller 
files a timely request for a hearing. The costs of these enforcement 
activities and the subsequent proceedings must be supported through 
fees pursuant to the above described statutory requirements. DEA notes 
that these costs are not recovered in these fee calculations as DEA is 
uncertain of their utilization. However, once DEA is able to determine 
the frequency of use of these tools, and their associated costs, these 
costs will be recovered through fees associated with self-certification 
as established in future rulemakings.

Relationship to State Laws

    Many States have enacted laws and/or regulations that impose 
conditions on the sale of scheduled listed chemical products.
    <bullet> Eight states have enacted and six others have proposed 
legislation that makes these products Schedule V controlled substances. 
Among other requirements, Schedule V substances may be sold only by a 
pharmacist to individuals who are at least 18. A logbook of the sales 
must be maintained.
    <bullet> Sixteen states have passed laws limiting sales to a 
pharmacist or pharmacy technicians or requiring that the products be 
stored behind the counter.
    <bullet> Twenty-seven states require a photo ID for such purchases.
    <bullet> Twenty-six states require a signed logbook.
    <bullet> Twenty-seven states impose single transaction limits.
    <bullet> Nineteen states have monthly or weekly limits.
    <bullet> Twenty-seven states have exemptions for prescription drugs 
and various forms of over-the-counter (OTC) drugs (liquids, pediatric 
forms, etc.).
    <bullet> One state requires a prescription to purchase these 
products.
    As the list indicates, the State laws vary considerably. Some parts 
of a State law may be less stringent than the CMEA requirements; other 
parts may be more stringent. CMEA does not preempt those requirements 
under State laws/regulations that are more stringent than the CMEA 
requirements. Simply put, all persons subject to CMEA must comply with 
the CMEA and the laws in the State(s) in which they sell scheduled 
listed chemical products at retail. Where the CMEA is less stringent 
than a State law (e.g., the State limits sales to licensed pharmacists 
or pharmacy technicians where CMEA does not), the State requirements 
continue to be in force. If there are State requirements that are less 
stringent than the CMEA provisions (e.g., higher daily limits, 
exemptions of some products), CMEA supersedes the provisions. DEA 
emphasizes that if State requirements for records cover the information 
CMEA mandates, the record created to meet the State law is sufficient 
to meet DEA's regulation.
    Regarding quantity sold, units may be specified in terms of the 
weight of the product or in terms of the number of packages sold. 
Logbook systems that display the quantity of the product sold by UPC 
code are sufficient to meet DEA's requirements. These options do not 
exclude other methods of displaying the quantity sold.
    DEA is accepting public comment on the interaction between state 
and federal logbook requirements. In addition, DEA is accepting public 
comment on the broader interplay and potential overlap between state 
regulations and CMEA requirements, and whether compliance with state 
regulations, if comparable to or more stringent than an associated CMEA 
requirement, should constitute compliance with such Federal 
requirement.

Discussion of the Rule

    To make the rule easier to follow for regulated sellers and mail 
order/Internet sellers, DEA is creating a new part 1314 that will 
include all requirements related to the sale of scheduled listed 
chemical products to end users. Regulations for the retail sale of 
these products that currently exist in part 1310 will either be moved, 
if still applicable, or removed. The new statutory definitions of 
``scheduled listed chemical product,'' ``regulated seller,'' ``mobile 
retail vendor,'' and ``at retail'' are being added to part 1300 
(Definitions). The definition of ``retail distributor'' is also being 
revised. Most of the new provisions in this Interim Final Rule are 
drawn from section 711 of the USA PATRIOT Improvement and 
Reauthorization Act of 2005.
    Part 1314 is divided into four subparts. Subpart A contains 
requirements that apply to any retail sale. Subpart B applies to sales 
by regulated sellers (i.e., sales for personal use, both in number of 
sales and volume of sales, either directly to walk-in customers or in 
face-to-face transactions, by stores or mobile retail vendors). Subpart 
C applies to retail sales that are shipped by mail or common or private 
carriers, regardless of how those sales are ordered. Subpart D contains 
the procedural requirements for issuing and responding to an order to 
show cause why the regulated seller or distributor should not be 
prohibited from selling scheduled listed chemical products.
    Sections 1314.01 and 1314.02 simply state the scope and 
applicability of the part. Section 1314.03 defines ``mail order sales'' 
using the language from Sec.  1310.03(c) and further clarifies that 
mail order includes any retail sale for personal use where the product 
is shipped by U.S. mail or by private or common carriers whether the 
order is received by mail, phone, fax, the Internet, or any method 
other than a face-to-face transaction.
    Section 1314.05 incorporates the statutory requirement for blister 
packs for nonliquids unless such packaging is not technically feasible.
    Section 1314.10 states the regulations do not preempt State laws 
unless there is a positive conflict between the laws and the 
regulations such that the two cannot consistently stand together. This 
language is drawn from 21 U.S.C. 903.
    Section 1314.15 copies the requirements for reporting losses, 
including thefts, that currently exist in Sec.  1310.06. DEA emphasizes 
that thefts must be reported as well as unusual or excessive losses or 
disappearances.
    In subpart B, Sec.  1314.20 includes the statutory requirements 
limiting sales, the daily limit of 3.6 grams and the 30-day mobile 
retail vendor limit of 7.5 grams. The 30-day limit of 9 grams applies 
to purchasers who are not addressed by this regulation. As noted 
previously, this provision is not included in this rule, but will be 
addressed in other rulemakings DEA is promulgating to implement the 
various provisions of the Combat Methamphetamine Epidemic Act of 2005.
    Section 1314.25 incorporates CMEA's provisions for storing the 
products behind the counter or in a locked cabinet. Mobile retail 
vendors are required to store the product in a locked cabinet.
    Section 1314.30 covers recordkeeping (logbook) requirements from 
CMEA as well as requirements currently in Sec.  1310.04. In addition to 
CMEA's requirements, DEA has copied the existing requirements from part 
1310 relative to where the records must be kept (at the place of 
business or at a central location if DEA has been notified). DEA is 
including in this section language stating that if a regulated seller 
is already maintaining records of these sales under State law, those 
records may be used to meet this requirement if they include the 
information specified in CMEA.

[[Page 56016]]

    The part 1310 requirements incorporated into the amended 
regulations do not include the provision that a regulated seller with 
multiple locations must have a system to detect a person purchasing 
from multiple locations owned or operated by the regulated seller. CMEA 
in section 711(f) provides for a civil penalty for a person who sells 
at retail a scheduled listed chemical product in violation of the daily 
3.6 gram sales limit, ``knowing at the time of the transaction involved 
(independent of consulting the logbook * * *) that the transaction is a 
violation.'' While the availability of civil penalties is not 
necessarily co-extensive with the chemical control requirements of the 
new law, DEA is not mandating, by this rule, that regulated sellers, 
other than mail order and mobile retail vendors, track multiple sales 
to individuals on a single day within the same retail outlet or across 
outlets of the same company. CMEA explicitly requires mail order 
outlets and mobile retail vendors to limit sales to an individual to 
7.5 grams in a 30-day period; it imposes no similar requirement on 
other retail sellers to limit 30-day sales to individuals. The 30-day 
limit of 9 grams is imposed on the purchaser, not the seller.
    Section 1314.35 incorporates the statutory requirements for 
training of sales personnel. DEA has developed training material, which 
it has made available on its Web site (http://www.deadiversion.usdoj.gov).
    Section 1314.40 covers CMEA's requirements on self-certification. 
As discussed above, DEA is setting an annual period for renewal of the 
certification.
    DEA has developed a web site that will allow many regulated sellers 
to complete and submit the self-certification form on line and print 
out a self-certification certificate for their records. The information 
required will include the name and address of the location and a point 
of contact. The regulated sellers will be classified into three 
categories: Chain stores that are currently controlled substance 
registrants, chain stores that are not registrants, and individual 
outlets. Chain stores wishing to file self-certifications for more than 
10 locations will have to print or copy the form electronically and 
submit the information to DEA by mail. DEA will work with these persons 
to facilitate this process. Persons interested in this self-
certification option should contact DEA for assistance. For current DEA 
registrants, the system will pre-populate the form with basic 
information.
    Section 1314.45 incorporates the privacy protection provisions of 
CMEA. These provisions define who may access the sales records and the 
use to which the data may be put. They also provide a good faith 
protection to regulated sellers that release the data to law 
enforcement authorities.
    Section 1314.50 includes CMEA's provision that states that a seller 
may take reasonable measures to guard against employing people who may 
present a risk of diversion. The measures may include asking about 
convictions of any crimes involving controlled substances or scheduled 
listed chemical products.
    In subpart C, Sec.  1314.100 incorporates the daily and 30-day 
sales limits for mail order sales. Section 1314.105 provides the above 
described requirements for verifying identity of the purchaser prior to 
shipment of the product. Section 1314.110 covers reports on mail order 
sales and is copied from Sec.  1310.06. Finally, Sec.  1314.115 copies 
language from Sec.  1310.05(f) on distributions not subject to 
reporting (sample packages, sales to long-term care facilities, 
prescription drugs).
    CMEA added to 21 U.S.C. 842 a provision that authorizes DEA to 
prohibit a regulated seller or a mail order seller from selling 
scheduled listed chemical products if the seller is found to be 
knowingly or recklessly in violation of the provisions controlling 
retail sales. To take this step, DEA must issue an order to show cause, 
as it does to suspend or revoke registrations. DEA is including in 
subpart D in Sec. Sec.  1314.150 and 1314.155 provisions on the process 
of issuing and responding to an order to show cause. These sections are 
taken from part 1309 and are the same as DEA uses to issue and reach a 
conclusion on orders to show cause under other DEA programs. If DEA 
issues an order to show cause, the regulated seller or mail order 
distributor must respond to the order to show cause within 30 days of 
service of the order to show cause. The regulated seller or mail order 
seller may request a hearing. The seller may continue to sell scheduled 
listed chemical products until DEA issues a final order. If DEA finds 
that a regulated seller or mail order distributor poses an imminent 
danger to public health or safety, DEA may suspend the seller's right 
to sell scheduled listed chemical products pending a final decision on 
the order to show cause.

Other Changes

    As noted above, CMEA's new definitions will be added to Sec.  
1300.02. In addition, the definition of ``regulated transaction'' is 
revised as mandated by section 712 of CMEA.
    In Sec.  1309.71, paragraph (a)(2), which requires certain 
ephedrine products to be stored behind the counter, is being removed 
because the new CMEA requirements supersede it. CMEA imposes the same 
restrictions on all scheduled listed chemical products unless they are 
stored in a locked cabinet in areas where the public has access.
    In Sec.  1310.04, paragraph (f)(1)(ii) is revised to indicate that 
the thresholds presented in the previous paragraph and in paragraph (g) 
for ephedrine, pseudoephedrine, and phenylpropanolamine apply only to 
non-retail distribution, import, and export and references part 1314 
for retail sales. The table of thresholds for retail distribution has 
been removed.
    In Sec.  1310.05, paragraph (f)(2) is revised to remove retail 
sales of scheduled listed chemical products.
    Sections 1310.14 and 1310.15 are being removed because the CSA no 
longer treats certain ephedrine products differently from other 
scheduled listed chemical products. These sections are being replaced 
by new Sec.  1310.16, which states that a manufacturer may apply to 
have a scheduled listed chemical product exempted from the requirements 
if DEA determines that the product cannot be used in the illicit 
manufacture of methamphetamine. DEA is adopting the application process 
that currently applies to ephedrine products that include other 
medically significant ingredients (Sec.  1310.14).

Regulatory Certifications

Administrative Procedure Act (5 U.S.C. 553)

    The Administrative Procedure Act (APA) generally requires that 
agencies, prior to issuing a new rule, publish a Notice of Proposed 
Rulemaking in the Federal Register. The APA also provides, however, 
that agencies may be excepted from this requirement when ``the agency 
for good cause finds (and incorporates the finding and a brief 
statement of reasons therefore in the rules issued) that notice and 
public procedure thereon are impracticable, unnecessary, or contrary to 
the public interest.'' 5 U.S.C. 553(b)(B).
    With publication of this interim rule, DEA is invoking this ``good 
cause'' exception to the APA's notice requirement based on the 
combination of several extraordinary factors. CMEA requires that on and 
after September 30, 2006, regulated sellers selling scheduled listed 
chemical products at retail shall self-certify with DEA in order to

[[Page 56017]]

continue to sell these products. CMEA imposes sales limits, purchase 
limits, product placement requirements, mail order customer 
identification requirements, and other requirements, some of which must 
be specified by regulation, all with an effective date of September 30, 
2006. Based on the effective date of this law, it is impracticable for 
DEA to comply with the APA's notice and comment requirements due to the 
limited time involved. Were DEA not to publish this Interim Rule with 
Request for Comment, regulated sellers selling scheduled listed 
chemical products at retail would not be able to self-certify by the 
date specified in the law. Were this not to occur, these regulated 
sellers would be forced to stop selling scheduled listed chemical 
products, or violate the law by doing so. Mail order distributors would 
also have difficulty, as DEA is required by regulation to establish 
procedures for these persons to identify their customers prior to 
shipping product. Without these regulations, mail order distributors 
would not be able to sell scheduled listed chemical products. 
Therefore, DEA also finds that it is contrary to the public interest 
not to issue these regulations as an Interim Rule, thereby allowing 
regulated sellers and mail order distributors to fully comply with the 
requirements of CMEA. While the CMEA was signed into law in March of 
2006, most of the law must be in effect by September 30, 2006. The 
broad scope of the new law, as well as the expedited effective dates, 
is a clear reflection of Congress's concern about the nation's growing 
methamphetamine epidemic and its desire to act quickly to prevent 
further illicit use of these chemicals.
    In light of these factors, DEA finds that ``good cause'' exists to 
issue this interim rule without engaging in traditional notice and 
comment rulemaking. In so doing, DEA recognizes that exceptions to the 
APA's notice and comment procedures are to be ``narrowly construed and 
only reluctantly countenanced.'' Am. Fed'n of Gov't Employees v. Block, 
655 F2d 1153, 1156 (D.C.Cir. 1981) (quoting New Jersey Dep't of Envtl. 
Prot. v. EPA, 626 F.2d 1038, 1045 (D.C.Cir. 1980)). Based on the 
totality of the circumstances associated with the CMEA, however, DEA 
finds that invocation of the ``good cause'' exception is justified.
    As noted throughout this document, DEA is seeking comments on 
details of implementation, particularly related to self-certification, 
where it has discretion.
    Under section 553(d) of the APA, DEA must generally provide a 30-
day delayed effective date for final rules. DEA may dispense with the 
30-day delayed effective date requirement ``for good cause found and 
published with the rule.'' Since it would be unnecessary to provide a 
delayed effective date for a change to the law that has already taken 
effect DEA has dispensed with the 30-day delayed effective date 
requirement. The sales limits and blister pack provisions became 
effective on April 8, 2006. The requirements for logbooks, training, 
and self-certification become effective September 30, 2006.

Regulatory Flexibility Act

    The Deputy Administrator hereby certifies that this rulemaking has 
been drafted in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)). The Regulatory Flexibility Act (RFA) applies to rules 
that are subject to notice and comment. Because this rule is simply 
codifying statutory provisions, DEA has determined, as explained above, 
that public notice and comment are not necessary. Consequently, the RFA 
does not apply. Where DEA has discretion in the way in which provisions 
of CMEA are implemented, however, DEA is seeking public comment and has 
sought, through the development of training materials and Web sites for 
self-certification, to reduce the cost to small entities.
    Although the RFA does not apply to this final rule, DEA has 
reviewed the potential impacts. The rule will affect a substantial 
number of small entities, but DEA does not believe that it will have a 
significant economic impact on small entities. As shown in the next 
section, OTC medications as a whole represent less than two percent of 
sales except for drug stores and mail order houses. Even the highest 
estimate of the value of scheduled listed chemical products represents 
less than 10 percent of the OTC market. Consequently, the loss of 
sales, if that occurs, will reduce sales at most by a fraction of one 
percent, not a significant economic impact. DEA expects that regulated 
sellers will decide whether their sale of the products is great enough 
to justify the cost of compliance or whether they can retain sufficient 
sales revenues by shifting to non-regulated substitutes. The smallest 
stores, which DEA expects to be convenience stores, may limit their 
sales of the products to individual transactions involving packages 
containing not more than 60 milligrams of pseudoephedrine, which would 
allow them to avoid the recordkeeping requirements. In this case, their 
total cost of compliance could be about $50 for training and self-
certification. DEA is specifically seeking public comments regarding 
the cost of this regulation to small entities, using a pre-statutory 
baseline of comparison (i.e., the state of the market prior to the 
Combat Methamphetamine Epidemic Act of 2005).
    Although not directly the subject of this rule, manufacturers and 
distributors will be affected by a reduction in sales of these 
products. The manufacturers of scheduled listed chemical products are 
also the manufacturers of the substitutes being marketed and the 
distributors handle both product lines; DEA has not been able to 
identify any manufacturer of these products that does not also market 
substitute products. DEA expects that the primary impact will be 
limited to reduction in sales that occurs because diversion is curbed. 
If the sales restrictions and quotas reduce the United States' demand 
for these chemical products, the world production of the chemicals is 
likely to drop, which will make less available to be diverted to 
superlabs operated by drug cartels. DEA seeks comments on impacts on 
manufacturers and distributors.

Executive Order 12866

    The Deputy Administrator further certifies that this rulemaking has 
been drafted in accordance with the principles in Executive Order 12866 
Sec.  1(b). It has been determined that this is ``a significant 
regulatory action.'' Therefore, this action has been reviewed by the 
Office of Management and Budget. As discussed above, this action is 
codifying statutory provisions and involves no agency discretion. 
However, DEA has reviewed the potential benefits and costs following 
OMB Circular A-4.
    The CMEA requirements impose the following costs on regulated 
sellers:
    <bullet> Training of employees who sell scheduled listed chemical 
product sales (0.5 hours).
    <bullet> Time to file the self-certification (0.5 hours).
    <bullet> Costs for logbooks ($47.55) or creating an electronic 
record system.
    <bullet> Additional time per sale to verify purchaser IDs and enter 
information into the logbook (1 to 2 minutes).
    <bullet> Storage space behind the counter or in locked cabinets 
($200-$600).
    DEA is seeking comments regarding all of the above assumptions and 
estimates.
    The requirements may also affect the sales at regulated sellers. If 
a seller decides to avoid the requirements by eliminating the product 
line or selling only the available substitutes, some customers may seek 
the products from sellers that continue to carry them. Regulated 
sellers, manufacturers, and distributors will also see some reduction

[[Page 56018]]

in sales as a result of diversion from regulated sellers becoming more 
difficult.
    Although DEA has estimated the unit cost of training, 
certification, logbooks, logbook entries, and storage space, DEA cannot 
estimate the total cost of the rule because the following critical 
items are unknown:
    <bullet> The value of the existing market in these products and the 
number of transactions that this market represents.
    <bullet> The number of stores that currently sell these products.
    <bullet> The number and type of stores that will continue to sell 
the products, the number that will elect to sell only the substitutes, 
and the number that will limit sales of the products to individual 
transactions involving not more than one 60-milligram or two 30-
milligram pseudoephedrine dosage units, which would not require 
recordkeeping, the most expensive part of compliance.
    <bullet> The number of customers who will seek out these products 
rather than purchase substitutes available on open shelves.
    <bullet> The number of stores that will elect to use bound logbooks 
versus using electronic systems.
    <bullet> The number of existing electronic signature capture 
systems that are capable of accepting or linking to name and address 
records.
    <bullet> The percentage of existing sales (and theft of the 
product) that is being diverted to illicit use.

DEA is seeking comments and data from the industry that would help 
address these items and provide an estimate of the impact. DEA 
recognizes that the answers to some of these issues will evolve over 
time as regulated sellers and manufacturers adjust to consumer choices. 
For example, regulated sellers may see little impact beyond the initial 
costs of training and self-certification if most consumers elect to 
purchase the substitute products that are already available under the 
same brand names as scheduled listed chemical products, either because 
the consumers are unaware of the product change, because the 
substitutes meet the consumers' needs, or because they are unwilling to 
spend extra time to buy scheduled listed chemical products.
    Regulated Sellers. The 2002 Economic Census data on product line 
sales indicate that about 92,000 retailers sell OTC medications. These 
include pharmacies, grocery stores, discount stores, warehouse clubs 
and superstores, convenience stores, variety stores, and mail order 
stores. In addition, up to 40,000 gas stations with convenience stores 
may sell OTC drug products. The number of retailers in each sector, the 
number with pharmacies, the number that sell nonprescription OTC drugs, 
and the percentage of their sales represented by OTC drugs are shown in 
Table 4 below. DEA solicits comments on the number of these entities 
that sell these products.

                          Table 4.--Sectors Selling Scheduled Listed Chemical Products
----------------------------------------------------------------------------------------------------------------
                                                                                                        OTC as
                                               Total       Number w                       Percent     percent of
                   NAICS                       number      pharmacy     Number w OTC      without    total sales
                                                                                          pharmacy        *
----------------------------------------------------------------------------------------------------------------
44511 Grocery stores......................       66,150       19,721            26,029         70.2         1.30
44611 Pharmacy and drug stores............       40,234       39,121            36,493          2.8         5.70
452112 Discount department stores.........        5,650        4,887             2,079         13.5         1.80
45291 Warehouse clubs and superstores.....        2,912        2,553             2,758         12.3         1.20
                                           ---------------------------------------------------------------------
    Subtotal..............................      114,946       66,282            67,359  ...........  ...........
                                           =====================================================================
44512 Convenience stores..................       29,212          370            12,399         98.7         1.60
44711 Gas stations with convenience stores       93,691            0         ** 40,068          100      ** 1.10
45299 All other general merchandise stores       28,456          577            11,840           98         1.20
 ***......................................
4541 Electronic shopping and mail order          15,910          453               250         97.2           13
 houses...................................
                                           ---------------------------------------------------------------------
    Total.................................      167,269        1,400     24,489-64,557  ...........  ...........
----------------------------------------------------------------------------------------------------------------
* For those firms that handle the product line.
** Drugs, health aids, beauty aids including cosmetics.
*** Includes variety stores.

    Even if all gas stations with convenience stores sold OTC drugs, 
there would be fewer of these establishments than exist in the main 
sectors selling OTC drugs. Most gas stations and convenience stores do 
not have pharmacies; OTC products represent a very small percentage of 
sales for them.
    DEA cannot determine what percentage of those selling OTC drugs 
sell scheduled listed chemical products, although it is likely that 
outlets that have pharmacies sell these products. Because 16 States 
representing 27 percent of the U.S. population already limit sales of 
these products to pharmacies, DEA estimates that the number of 
potentially regulated entities is between 89,000 and 118,000.\1\ This 
estimate does not specifically include mobile retail vendors, but DEA 
does not believe that they constitute a large segment of retail 
sellers. The actual number could be lower; many of the stores, 
particularly convenience stores, do not carry a full range of OTC drug 
products, and some may not sell this category of drugs. DEA seeks 
comment on this issue. Conversely, large mail order distributors may 
handle large quantities of scheduled listed chemical products. DEA also 
seeks comment on the number, size, and sales of mail order entities.
---------------------------------------------------------------------------

    \1\ The 27 percent is a conservation estimate; the 16 states 
represents 28 percent of the convenience stores in the country and 
35 percent of the gas stations with convenience stores.
---------------------------------------------------------------------------

    Substitutes. As discussed above, many States have imposed sales 
restrictions on scheduled listed chemical products prior to CMEA. In 
reaction to those restrictions and to concern about diversion of their 
products, manufacturers have reformulated many product lines to 
alternative decongestants that cannot be used to make methamphetamine. 
These substitutes are being sold under the same product names and in 
boxes that look the same as those used for scheduled listed chemical 
products. One major manufacturer expected to have converted half of its 
decongestant product line to substitutes by January 2006. Two of the 
largest drug store

[[Page 56019]]

chains do not list scheduled listed chemical products on their online 
stores, but offer more than 60 cold medications containing other 
ingredients.
    At present, there is little information on how consumers will react 
to sales restrictions. On April 7, 2004, Oklahoma made pseudoephedrine 
products Schedule V controlled substances, but exempted gel caps and 
liquids. According to IRI InfoScan, in the 52 weeks after 
implementation, sales of all pseudoephedrine products fell 16.2 percent 
and sales of the substitutes rose by 24 percent. Sales of exempted gel 
caps rose 109.3 percent and liquids 14.5 percent, but tablets fell 35.5 
percent. Overall, sales in the cold and allergy group in Oklahoma fell 
3.9 percent. Illinois, which imposed less stringent rules, saw little 
change in purchases, according to IRI InfoScan. The Slone Epidemiology 
Center at Boston University took a broader look at drug purchases in 
2004 and found that between 2003 and 2004, the number of adults 
reporting use of pseudoephedrine fell from 7 percent to 4.8 percent. 
This decline occurred prior to State restrictions and to the 
availability of many substitute products, but after limits on purchases 
were set by Federal law and by many large chain stores.
    If national patterns reflect Oklahoma's experience, a 3.9 percent 
drop in cold/allergy medicine sales would imply a $117,000,000 loss in 
sales. However, if they reflect national trends reported by the Slone 
Epidemiology Center, a 2.2 percent drop in cold/allergy medicine sales 
would imply a $33,000,000 loss in sales. Since market effects will 
occur within the context of increased marketing and distribution of 
substitutes, the direct effects on revenues could be lower than either 
estimate.
    It is not clear how consumers and retailers will react to a 
nationwide limit on all scheduled listed chemical product sales because 
the availability of substitute products may increase. If consumers 
continue to ask for scheduled listed chemical products, retailers will 
incur costs to store them behind the counter or in locked cabinets and 
to record every transaction. The purchaser will take extra time and 
possibly delay other customers who have to wait while the transaction 
is completed. DEA notes that in stores with pharmacies, the 
recordkeeping requirements established by this rule may direct a higher 
proportion of transactions to the pharmacy versus the standard checkout 
line. DEA is seeking public comment on the effect of these 
recordkeeping and product placement requirements on pharmacy wait times 
and any staffing costs these requirements generate. Alternatively, if 
few consumers seek the products, many retailers may decide not to carry 
them. This decision would eliminate their costs, but could impose a 
cost on the consumer who has to go to multiple stores or travel greater 
distances to find the product. Regulated sellers who continue to sell 
the products will have to decide how to log the sales, which will 
impose costs. DEA is seeking comment on the cost of logging sales, 
whether this log be paper or electronic. Part of each seller's 
calculation will be whether the value of the sales is sufficient to 
offset the costs. As discussed above, OTC medications as a whole 
represent between one and two percent of the sales of sellers except 
for pharmacies and mail order sellers; scheduled listed chemical 
products probably represent less than 10 percent of those sales. For 
many smaller stores a small decline in sales, if that occurs, may be 
less costly than compliance. DEA has estimated that small convenience 
stores sell between $20 and $40 a month of these products for 
legitimate purposes (69 FR 8691, February 25, 2004).
    Size of the market; data issues. DEA has been unable to determine 
the size of the market for scheduled listed chemical products. The Food 
and Drug Administration reported that IMS Health data estimated the 
market is about $500 million; FDA further reported that IRI estimated 
the market was $1.5 billion. The IRI Oklahoma data implied that 
pseudoephedrine represented about 75 percent of the cold medication 
market, but the value other sources provide for the cold medication 
market in 2005 is about $4 billion.
    IRI indicated that national sales for the category had dropped by 
0.5 percent between May 2004 and May 2005. A Kline & Company study 
indicated that sales in the cold medication category rose 12 percent in 
2005. Part of the problem is that different groups appear to define the 
market segment differently, including a different mix of products. DEA 
seeks information on the actual value of the market for scheduled 
listed chemical products and the number of transactions. Even with the 
total value of the market, DEA would need to understand the value of 
the average transactions. The products are available in a wide variety 
of strengths and number of dosage units; the sales limits allow 
purchases of multiple packages of most products. DEA also seeks 
comments on the effect of the restrictions on product prices. At 
present, the substitutes are selling for prices that are equivalent to 
those for scheduled listed chemical products (based on maximum daily 
dosage units). The additional costs of handling scheduled listed 
chemical products could, however, increase their prices if sellers pass 
on the costs to consumers.
    Diversion. The limits and restrictions that CMEA imposes are 
intended to reduce the diversion of scheduled listed chemical products. 
Manufacturers and regulated sellers will see some reduction in sales as 
a result of retail purchases for diversion declining. DEA has no 
reliable information on the percentage of the market in these products 
that was diverted. DEA expects that as it implements other CMEA 
requirements it will have a better understanding of the size of the 
diversion market. Nonetheless, because sales of these products 
represent less than one percent of most retailer's total sales, the 
loss of sales for diversion is unlikely to impose a substantial cost on 
retailers selling to legitimate purchasers.
    Implementation Costs. For most regulated sellers that continue to 
carry scheduled listed chemical products, the largest cost will be the 
added time to collect and record logbook information regarding the 
purchaser at each transaction. DEA estimates that it will take one to 
two minutes for the seller and purchaser to enter into the logbook the 
information required by CMEA--name and address of purchaser, name and 
quantity of product sold, date and time of transaction, and purchaser's 
signature--and seeks comment on this estimate.
    Assuming market changes may reflect the Oklahoma experience to a 
degree, a 16 percent drop in sales of regulated products would change 
the number of transactions that would require recordkeeping to 
56,490,000. Assuming the recordkeeping requirements add 2 minutes to 
each transaction, they would impose an annual cost between $73,000,000 
and $80,000,000 in terms of time burden. These estimates assume, for 
the low end, the average hourly wage of retail sales clerks ($11.86 
with fringe benefits) plus public time ($27/hour); for the high end, it 
assumes the average hourly wage of a pharmacy technician ($15.26 with 
fringe benefits) plus public time ($27/hour).
    Assuming market changes reflect data reported by The Slone 
Epidemiology Center, a 2.2 percent drop in sales of regulated products 
would change the number of transactions that would require 
recordkeeping by 2,193,000. Using the same assumptions regarding 
increased transaction times, this would imply an annual cost in terms 
of time

[[Page 56020]]

burden between $85,000,000 and $93,000,000.
    Another cost will be the costs of recordkeeping systems. CMEA 
allows either a logbook or an electronic record. DEA is seeking 
comments on whether regulated sellers will be able to use electronic 
signature capture systems to collect names and addresses as well as 
signatures, the cost of adapting systems to perform this function, and 
likelihood that sellers will do this versus using a bound logbook. DEA 
is seeking information from regulated sellers on whether they plan to 
limit sales to pharmacy or special counters or whether they will handle 
sales at regular checkout lines. Finally, DEA is seeking comments on 
how much behind-the-counter space regulated sellers will need to devote 
to these products, the cost of doing so, and the extent to which costs 
may be passed on to the consumer.
    Blister Packs. For reasons of product safety and the previous 
blister-pack exemption, almost all scheduled listed chemical products 
are already sold in blister packs. DEA seeks comments on whether this 
requirement imposes a burden on any manufacturers.
    Benefits. Congress passed CMEA to make it more difficult for 
individuals to purchase scheduled listed chemical products and use them 
to make methamphetamine. The retail restrictions are part of a series 
of steps that Congress adopted to address the sources of 
methamphetamine abuse; other steps include import and production quotas 
and tracking of international transactions.
    Methamphetamine remains the primary drug produced in illicit 
laboratories within the United States. Data from the El Paso 
Intelligence Center's (EPIC) Clandestine Laboratory Database indicates 
that more than 17,170 methamphetamine laboratory incidents in calendar 
year 2004 and 12,139 incidents in calendar year 2005 (as reported to 
EPIC through June 29, 2006). According to EPIC, from January 2000 
through June 2006, there were 7,125 laboratories reportedly using 
ephedrine and 44,380 reportedly using pseudoephedrine as precursor 
material for methamphetamine production. Additionally EPIC reports the 
seizure of 51 amphetamine laboratories (using phenylpropanolamine) 
during the same period. The vast majority of these laboratories used 
pharmaceutical products containing pseudoephedrine, ephedrine, and 
phenylpropanolamine as the source of precursor material.
    According to the Substance Abuse and Mental Health Services 
Administration (SAMHSA), Drug Abuse Warning Network (DAWN), in 2004, 
the latest year for which data are available, amphetamine and 
methamphetamine was mentioned in almost 103,000 emergency department 
(ED) visits; methamphetamine accounted for 73,400 of these visits. 
These numbers represent a rapid increase in recent years. SAMHSA 
reported that drug abuse-related ED visits involving amphetamine/
methamphetamine rose from 25,200 in 1995 to 38,960 in 2002 and 42,500 
in 2003. If the cost of the visit is $500, which is probably low in 
many areas, the total cost would have been $50 million. The DAWN 
mortality data for 33 metropolitan areas in 2003, the most recent year 
available, report amphetamine or methamphetamine was involved in 524 
deaths and was the only drug present in 93 of those deaths. A 
University of Arkansas Study on the economic impact of methamphetamine 
use in Benton County, Arkansas, estimated that the average 
methamphetamine user cost his or her employer $47,500 a year, with 50 
percent of cost due to increased absenteeism and 32 percent due to lost 
productivity.
    The surge in methamphetamine abuse and the manufacture of the drug 
in clandestine laboratories has caused serious law enforcement and 
environmental problems, particularly in rural communities. Rural areas 
are frequently the site of clandestine laboratories because the 
manufacturing process produces distinctive odors and can be identified 
if there are close neighbors. Besides causing crime as people steal 
ingredients to make methamphetamine and steal to support their 
addiction, the clandestine laboratories often leave serious pollution 
behind. A laboratory can produce 6 to 10 pounds of hazardous waste for 
every pound of methamphetamine produced. Table 5 shows the hazardous 
waste cleanup costs incurred by States and DEA by Fiscal Year (October 
1 through September 30) for several previous fiscal years.

                        Table 5.--State and Federal Clandestine Laboratory Cleanup Costs
----------------------------------------------------------------------------------------------------------------
                                                                                    State/local
                           Fiscal year                               DEA cost        meth cost      Total cost
----------------------------------------------------------------------------------------------------------------
1998............................................................      $4,030,000      $1,420,000      $5,450,000
1999............................................................       3,020,000       8,420,000      11,440,000
2000............................................................       4,120,000      11,800,000      15,920,000
2001............................................................       2,800,000      19,240,000      22,040,000
2002............................................................       2,190,000      21,490,000      23,680,000
2003............................................................       1,150,000      15,040,000      16,190,000
2004............................................................         810,000      17,680,000      18,490,000
2005............................................................         650,000      17,020,000      17,670,000
2006*...........................................................         470,000      12,180,000      12,650,000
----------------------------------------------------------------------------------------------------------------
* Data for fiscal year 2006 is through the third quarter (June 30, 2006).

    The Federal and State cleanups are generally limited to removing 
chemicals that could be reused; they do not address water and soil 
pollution that remain. Owners of the property are responsible for 
completing the cleanup of contaminated water and soil, but if the owner 
cannot pay the cost, local governments bear the burden or the 
contamination remains.
    The effectiveness of the control of retail sales can be seen in the 
decline in clandestine laboratory incidents in States such as Oklahoma. 
In 2003, before Oklahoma implemented retail sales controls, there were 
1,068 clandestine laboratory incidents in the State. In 2005, the first 
full year of the sales controls, there were only 217 incidents. The 
CMEA provisions on retail sales will continue the trend of reducing the 
number of clandestine laboratories. This trend will reduce the cost to 
State and local governments as well as the hazard to law enforcement 
officers and others from exposure to the hazardous chemicals left 
behind.
    Conclusion. Because of the many unknowns, DEA is unable to 
determine with any certainty whether the CMEA

[[Page 56021]]

requirements will impose an annual cost on the economy of $100 million 
or more, the standard for an economically significant rule under 
Executive Order 12866. If the value of the existing market is on the 
low end of the range ($500 million), the additional costs, including 
transaction costs, would be considerably lower than $100 million even 
if there is no reduction in sales. If the value of the market is $1.5 
billion and there is no reduction in sales, the cost could exceed $100 
million. DEA considers it likely that product switching and reduced 
sales will result in annual costs below $100 million, but until the 
statutory requirements are implemented and both retailers and consumers 
respond, DEA cannot estimate total costs with any certainty.

Public Comment

    To assist DEA in finalizing its Regulatory Impact Analysis, DEA is 
seeking public comment on the following questions:
    <bullet> What is the size of the market for products regulated 
under this rule? What proportion of the cold and allergy product market 
are pseudoephedrine-based products?
    <bullet> Using a pre-CMEA baseline, will this regulation have any 
effect on the prices of regulated products? If so, what is the 
magnitude of the change?
    <bullet> How many retailers may choose not to carry the regulated 
products rather than incur the regulatory costs? What is their annual 
sales volume with regard to regulated products? What is the cost 
associated with that effect?
    <bullet> If stores choose not to carry the regulated products, what 
are consumers' travel costs associated with the decreased quantity of 
stores selling the product?
    <bullet> Placing products behind the counter may increase 
competition for space behind the counter. Will it increase the cost of 
storage space behind the counter? What is the cost imposed on the 
consumption of other goods? What, if any, effect will this have on the 
prices of other goods?
    <bullet> Among stores that opt to direct regulated transactions to 
their pharmacies, will this additional traffic have an effect on 
pharmacy wait times? Will the increase in pharmacy transactions require 
additional staffing?
    <bullet> What equipment is required for retailers who wish to 
handle regulated sales at the regular checkout line? What is its cost?
    <bullet> What are wait times for regulated transactions when two or 
more consumers arrive to purchase regulated products?
    <bullet> What is the cost to manufacturers, given expected demand 
reductions for regulated products?
    <bullet> To what extent, and under what circumstances, can 
substitutes for the regulated products reduce the expected cost of this 
regulation?
    <bullet> What are the results of any recent studies on the 
effective doses of substitute products and their safety at different 
levels?
    <bullet> To what extent are training and recordkeeping costs fixed 
versus variable?

Paperwork Reduction Act of 1995

    CMEA mandates a number of new information collections and 
recordkeeping requirements. Regulated sellers are required to train any 
employee who will be involved in selling scheduled listed chemical 
products and to document the training. Regulated sellers must also 
self-certify to DEA that all affected employees have been trained and 
that the seller is in compliance with all CMEA provisions. Finally, 
CMEA mandates that each sale at retail be documented in a written or 
electronic logbook and that the logbooks be retained for two years.
    The Department of Justice, Drug Enforcement Administration, has 
submitted the following information collection request to the Office of 
Management and Budget for review and clearance in accordance with 
review procedures of the Paperwork Reduction Act of 1995. The 
information collection is published to obtain comments from the public 
and affected agencies.
    All comments and suggestions, or questions regarding additional 
information, to include obtaining a copy of the information collection 
instrument with instructions, should be directed to Mark W. Caverly, 
Chief, Liaison and Policy Section, Office of Diversion Control, Drug 
Enforcement Administration, Washington, DC 20537.
    Written comments and suggestions from the public and affected 
agencies concerning the collection of information are encouraged. Your 
comments on the information collection-related aspects of this rule 
should address one or more of the following four points:
    (1) Evaluate whether the collection of information is necessary for 
the proper performance of the functions of the agency, including 
whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the collection of information, including the validity of the 
methodology and assumptions used;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses.
Overview of This Information Collection
    (1) Type of Information Collection: New collection.
    (2) Title of the Form/Collection: Self-certification, Training and 
Logbooks for Regulated Sellers of Scheduled Listed Chemical Products.
    (3) Agency form number, if any, and the applicable component of the 
Department of Justice sponsoring the collection: Form Number: DEA Form 
597, Office of Diversion Control, Drug Enforcement Administration, U.S. 
Department of Justice.
    (4) Affected public who will be asked or required to respond, as 
well as a brief abstract:
    Primary: Business or other for-profit.
    Other: None.
    Abstract: CMEA mandates that retail sellers of scheduled listed 
chemical products maintain a written or electronic logbook of sales, 
retain a record of employee training, and complete a self-certification 
form verifying the training and compliance with CMEA provisions 
regarding retail sales of scheduled listed chemical products.
    (5) An estimate of the total number of respondents and the amount 
of time estimated for an average respondent to respond: 89,000, 25.9 
hours.
    As discussed in the previous section, DEA estimates that the number 
of potential regulated sellers could range from 89,000 to 118,000. That 
number would include a substantial number of convenience stores, most 
of which may not find the burden of self-certification, storage, 
recordkeeping, and training worth the sales of items that represent a 
very small percentage of their overall sales. Thus, DEA expects that 
the number of regulated sellers that will seek to self-certify will be 
no higher than 89,000. Consequently, DEA has used the lower estimate 
for the information collection. The average annual burden hour per 
respondent is 25.9 hours, most of which is the additional time needed 
to record the statutorily mandated information on each sales 
transaction.
    (6) An estimate of the total public burden (in hours) associated 
with the

[[Page 56022]]

collection: 4,548,500 hours. The estimate includes both the burden 
hours for regulated sellers and the time customers would take to 
provide information during the transaction.
    Regulated sellers will need to maintain a record of employee 
training, self-certify, and maintain a logbook of transactions. DEA 
estimates that each regulated seller will spend 0.5 hours collecting 
the information and completing the online self-certification form. 
Completing a roster of employees trained is estimated to take 3 minutes 
per employee, assuming that the recordkeeping takes one tenth of the 
time spent on training. Finally, DEA estimates that having the customer 
enter information and sign the log while the sales person checks the 
photo ID will take two minutes per transaction. DEA assumes 
recordkeeping requirements will not lengthen checkout lines, and will 
not influence the transaction times of other customers. Further, this 
estimate does not account for scenarios in which two or more customers 
arrive to purchase scheduled listed chemical products. DEA assumes that 
all pharmacists and pharmacy technicians will be trained (about 
300,000) plus 100,000 other sales clerks. DEA used an estimate of 133 
million transactions to develop total burden hours for transactions, 
assuming that the total value of the market is the midpoint of the 
estimates ($1 billion) and that the average value of a transaction is 
$8. (Product prices range from $4 to $14 per package depending on the 
number of dosage units and strength.) The number of transactions was 
reduced to 67.25 million to account for the states that already have 
requirements for logbooks; this rule imposes no additional burden for 
the transactions on either purchasers or sellers in those states. Based 
on Bureau of Census state population numbers for 2005, these states 
represent 49 percent of the United States population. Table 6 presents 
the burden hour calculations.

                                    Table 6.--Estimate of Total Burden Hours
----------------------------------------------------------------------------------------------------------------
                                                                                     Number of     Total burden
                   Activity                             Unit burden hour            activities         hours
----------------------------------------------------------------------------------------------------------------
Training record...............................  0.05 hour (3 minutes)...........         400,000          20,000
Self-certification............................  0.5 hour (30 minutes)...........          89,000          44,500
Transaction record............................  0.033 hour (2 minutes)..........      67,250,000       2,242,000
Customer time.................................  0.033 hour (2 minutes)..........      67,250,000       2,242,000
                                               -----------------------------------------------------------------
    Total.....................................  ................................  ..............       4,548,500
----------------------------------------------------------------------------------------------------------------

    If additional information is required contact: Lynn Bryant, 
Department Clearance Officer, Information Management and Security 
Staff, Justice Management Division, Department of Justice, Patrick 
Henry Building, Suite 1600, 601 D Street NW., Washington, DC 20530.

Executive Order 12988

    This regulation meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988 Civil Justice 
Reform.

Executive Order 13132

    This rulemaking does not impose enforcement responsibilities on any 
State; nor does it diminish the power of any State to enforce its own 
laws. The rule does preempt State laws that are less stringent than the 
statutory requirements. These requirements, however, are mandated under 
CMEA and DEA has no authority to alter them or change the preemption. 
Accordingly, this rulemaking does not have federalism implications 
warranting the application of Executive Order 13132.

Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of 
$118,000,000 or more in any one year, and will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.

Congressional Review Act

    This rule is a major rule as defined by section 804 of the Small 
Business Regulatory Enforcement Fairness Act of 1996 (Congressional 
Review Act). This rule may result in an annual effect on the economy of 
$100,000,000 or more; it will not cause a major increase in costs or 
prices; or significant adverse effects on competition, employment, 
investment, productivity, innovation, or on the ability of United 
States-based companies to compete with foreign-based companies in 
domestic and export markets. Depending heavily on the assumptions used, 
the economic impact of this rule could be substantially higher or lower 
than $100,000,000.
    CMEA requires that on and after September 30, 2006, regulated 
sellers selling scheduled listed chemical products at retail shall 
self-certify with DEA in order to continue to sell these products. CMEA 
imposes sales limits, purchase limits, product placement requirements, 
mail order customer identification requirements, and other 
requirements, some of which must be specified by regulation, all with 
an effective date of September 30, 2006. Based on the effective date of 
this law, it is impracticable for DEA to comply with the requirements 
of CRA section 801 pertaining to delayed effective dates of major rules 
due to the limited time involved. Were DEA not to publish this Interim 
Rule with Request for Comment, regulated sellers selling scheduled 
listed chemical products at retail would not be able to self-certify by 
the date specified in the law. Were this not to occur, these regulated 
sellers would be forced to stop selling scheduled listed chemical 
products, or violate the law by doing so. Mail order distributors would 
also have difficulty, as DEA is required by regulation to establish 
procedures for these persons to identify their customers prior to 
shipping product. Without these regulations, mail order distributors 
would not be able to sell scheduled listed chemical products. 
Therefore, DEA also finds that it is contrary to the public interest 
not to issue these regulations as an Interim Rule, thereby allowing 
regulated sellers and mail order distributors to fully comply with the 
requirements of CMEA. While the CMEA was signed into law in March of 
2006, most of the law must be in effect by September 30, 2006. The 
broad scope of the new law, as well as the expedited effective dates, 
is a clear reflection of Congress's concern about the nation's growing 
methamphetamine epidemic and its desire to act quickly to prevent 
further illicit use of these chemicals. In light of these factors, DEA 
finds that ``good cause'' exists to make this Interim Rule with Request 
for Comment

[[Page 56023]]

effective September 21, 2006, except that Sec. Sec.  1314.20, 1314.25, 
and 1314.30 (with the exception of Sec.  1314.30(a)(2)) are effective 
September 30, 2006. Section 1314.30(a)(2) is effective November 27, 
2006.

List of Subjects

21 CFR Part 1300

    Chemicals, Drug traffic control.

21 CFR Part 1309

    Administrative practice and procedure, Drug traffic control, 
Exports, Imports, Security measures.

21 CFR Part 1310

    Drug traffic control, Exports, Imports, Reporting and recordkeeping 
requirements.

21 CFR Part 1314

    Drug traffic control, Reporting and recordkeeping requirements.


0
For the reasons set out above, 21 CFR Chapter II is amended as follows:

PART 1300--DEFINITIONS

0
1. The authority citation for part 1300 continues to read as follows:

    Authority: 21 U.S.C. 802, 871(b), 951, 958(f).


0
2. Section 1300.02 is amended by revising paragraphs (b)(28) and (29), 
removing paragraph (b)(31), redesignating paragraphs (b)(32) through 
(b)(34) as (b)(31) through (b)(33), and adding new paragraphs (b)(34) 
through (b)(37) to read as follows:


Sec.  1300.02  Definitions related to listed chemicals.

* * * * *
    (b) * * *
    (28) The term regulated transaction means:
    (i) A distribution, receipt, sale, importation, or exportation of a 
listed chemical, or an international transaction involving shipment of 
a listed chemical, or if the Administrator establishes a threshold 
amount for a specific listed chemical, a threshold amount as determined 
by the Administrator, which includes a cumulative threshold amount for 
multiple transactions, of a listed chemical, except that such term does 
not include:
    (A) A domestic lawful distribution in the usual course of business 
between agents or employees of a single regulated person; in this 
context, agents or employees means individuals under the direct 
management and control of the regulated person;
    (B) A delivery of a listed chemical to or by a common or contract 
carrier for carriage in the lawful and usual course of the business of 
the common or contract carrier, or to or by a warehouseman for storage 
in the lawful and usual course of the business of the warehouseman, 
except that if the carriage or storage is in connection with the 
distribution, importation, or exportation of a listed chemical to a 
third person, this paragraph does not relieve a distributor, importer, 
or exporter from compliance with parts 1309, 1310, and 1313 of this 
chapter;
    (C) Any category of transaction or any category of transaction for 
a specific listed chemical or chemicals specified by regulation of the 
Administrator as excluded from this definition as unnecessary for 
enforcement of the Act;
    (D) Any transaction in a listed chemical that is contained in a 
drug other than a scheduled listed chemical product that may be 
marketed or distributed lawfully in the United States under the Federal 
Food, Drug, and Cosmetic Act, subject to paragraph (b)(28)(i)(E) of 
this section, unless--
    (1) The Administrator has determined pursuant to the criteria in 
Sec.  1310.10 of this chapter that the drug or group of drugs is being 
diverted to obtain the listed chemical for use in the illicit 
production of a controlled substance; and
    (2) The quantity of the listed chemical contained in the drug 
included in the transaction or multiple transactions equals or exceeds 
the threshold established for that chemical;
    (E) Any transaction in a scheduled listed chemical product that is 
a sale at retail by a regulated seller or a distributor required to 
submit reports under Sec.  1310.03(c) of this chapter; or
    (F) Any transaction in a chemical mixture designated in Sec. Sec.  
1310.12 and 1310.13 of this chapter that the Administrator has exempted 
from regulation.
    (ii) A distribution, importation, or exportation of a tableting 
machine or encapsulating machine except that such term does not include 
a domestic lawful distribution in the usual course of business between 
agents and employees of a single regulated person; in this context, 
agents or employees means individuals under the direct management and 
control of the regulated person.
    (29) The term retail distributor means a grocery store, general 
merchandise store, drug store, or other entity or person whose 
activities as a distributor relating to drug products containing 
pseudoephedrine or phenylpropanolamine are limited almost exclusively 
to sales for personal use, both in number of sales and volume of sales, 
either directly to walk-in customers or in face-to-face transactions by 
direct sales. Also for the purposes of this paragraph, a grocery store 
is an entity within Standard Industrial Classification (SIC) code 5411, 
a general merchandise store is an entity within SIC codes 5300 through 
5399 and 5499, and a drug store is an entity within SIC code 5912.
* * * * *
    (34)(i) The term scheduled listed chemical product means a product 
that contains ephedrine, pseudoephedrine, or phenylpropanolamine and 
may be marketed or distributed lawfully in the United States under the 
Federal, Food, Drug, and Cosmetic Act as a nonprescription drug. 
Ephedrine, pseudoephedrine, and phenylpropanolamine include their 
salts, optical isomers, and salts of optical isomers.
    (ii) Scheduled listed chemical product does not include any product 
that is a controlled substance under part 1308 of this chapter. In the 
absence of such scheduling by the Attorney General, a chemical 
specified in paragraph (b)(34)(i) of this section may not be considered 
to be a controlled substance.
    (35) The term regulated seller means a retail distributor 
(including a pharmacy or a mobile retail vendor), except that the term 
does not include an employee or agent of the distributor.
    (36) The term mobile retail vendor means a person or entity that 
makes sales at retail from a stand that is intended to be temporary or 
is capable of being moved from one location to another, whether the 
stand is located within or on the premises of a fixed facility (such as 
a kiosk at a shopping center or an airport) or whether the stand is 
located on unimproved real estate (such as a lot or field leased for 
retail purposes).
    (37) The term at retail, with respect to the sale or purchase of a 
scheduled listed chemical product, means a sale or purchase for 
personal use, respectively.

PART 1309--REGISTRATION OF MANUFACTURERS, DISTRIBUTORS, IMPORTERS, 
AND EXPORTERS OF LIST I CHEMICALS

0
3. The authority citation for part 1309 continues to read as follows:

    Authority: 21 U.S.C. 802, 821, 822, 823, 824, 830, 871(b), 875, 
877, 958.


0
4. Section 1309.71(a) is revised to read as follows:


Sec.  1309.71  General security requirements.

    (a) All applicants and registrants must provide effective controls 
and

[[Page 56024]]

procedures to guard against theft and diversion of List I chemicals. 
Chemicals must be stored in containers sealed in such a manner as to 
indicate any attempts at tampering with the container. Where chemicals 
cannot be stored in sealed containers, access to the chemicals should 
be controlled through physical means or through human or electronic 
monitoring.
* * * * *

PART 1310--RECORDS AND REPORTS OF LISTED CHEMICALS AND CERTAIN 
MACHINES

0
5. The authority citation for part 1310 continues to read as follows:

    Authority: 21 U.S.C. 802, 827(h), 830, 871(b), 890.


0
6. In Sec.  1310.04, paragraph (f)(1)(ii) is revised to read as 
follows:


Sec.  1310.04  Maintenance of records.

* * * * *
    (f) * * *
    (1) * * *
    (ii) For List I chemicals that are scheduled listed chemical 
products as defined in Sec.  1300.02, the thresholds established in 
paragraphs (f)(1)(i) and (g) of this section apply only to non-retail 
distribution, import, and export. Sales of these products at retail are 
subject to the requirements of part 1314 of this chapter.
* * * * *

0
7. Section 1310.05 is amended by revising paragraph (f)(2) to read as 
follows:


Sec.  1310.05  Reports.

* * * * *
    (f) * * *
    (2) Distributions of drug products by retail distributors that may 
not include face-to-face transactions to the extent that such 
distributions are consistent with the activities authorized for a 
retail distributor as specified in Sec.  1300.02(b)(29) of this 
chapter, except that this paragraph does not apply to sales of 
scheduled listed chemical products at retail.
* * * * *

0
8. Remove Sec.  1310.14.

0
9. Remove Sec.  1310.15.

0
10. Add Sec.  1310.16 to read as follows:


Sec.  1310.16  Exemptions for certain scheduled listed chemical 
products.

    (a) Upon the application of a manufacturer of a scheduled listed 
chemical product, the Administrator may by regulation provide that the 
product is exempt from part 1314 of this chapter if the Administrator 
determines that the product cannot be used in the illicit manufacture 
of a controlled substance.
    (b) An application for an exemption under this section must contain 
all of the following information:
    (1) The name and address of the applicant.
    (2) The exact trade name of the scheduled listed chemical product 
for which exemption is sought.
    (3) The complete quantitative and qualitative composition of the 
drug product.
    (4) A brief statement of the facts that the applicant believes 
justify the granting of an exemption under this section.
    (5) Certification by the applicant that the product may be lawfully 
marketed or distributed under the Federal, Food, Drug, and Cosmetic 
Act.
    (6) The identification of any information on the application that 
is considered by the applicant to be a trade secret or confidential and 
entitled to protection under U.S. laws restricting the public 
disclosure of such information by government employees.
    (c) The Administrator may require the applicant to submit 
additional documents or written statements of fact relevant to the 
application that he deems necessary for determining if the application 
should be granted.
    (d) Within a reasonable period of time after the receipt of a 
completed application for an exemption under this section, the 
Administrator shall notify the applicant of acceptance or non-
acceptance of the application. If the application is not accepted, an 
explanation will be provided. The Administrator is not required to 
accept an application if any of the information required in paragraph 
(b) of this section or requested under paragraph (c) of this section is 
lacking or not readily understood. The applicant may, however, amend 
the application to meet the requirements of paragraphs (b) and (c) of 
this section.
    (e) If the application is accepted for filing, the Administrator 
shall issue and publish in the Federal Register an order on the 
application, which shall include a reference to the legal authority 
under which the order is based. This order shall specify the date on 
which it shall take effect.
    (f) The Administrator shall permit any interested person to file 
written comments on or objections to the order. If any comments or 
objections raise significant issues regarding any findings of fact or 
conclusions of law upon which the order is based, the Administrator 
shall immediately suspend the effectiveness of the order until he may 
reconsider the application in light of the comments and objections 
filed. Thereafter, the Administrator shall reinstate, revoke, or amend 
the original order as deemed appropriate.

0
11. Part 1314 is added to 21 CFR Chapter II to read as follows:

PART 1314--RETAIL SALE OF SCHEDULED LISTED CHEMICAL PRODUCTS

Subpart A--General
1314.01 Scope.
1314.02 Applicability.
1314.03 Definitions.
1314.05 Requirements regarding packaging of nonliquid forms.
1314.10 Effect on state laws.
1314.15 Loss reporting.
Subpart B--Sales by Regulated Sellers
1314.20 Restrictions on sales quantity.
1314.25 Requirements for retail transactions.
1314.30 Recordkeeping for retail transactions.
1314.35 Training of sales personnel.
1314.40 Self-certification.
1314.45 Privacy protections.
1314.50 Employment measures.
Subpart C--Mail-Order Sales
1314.100 Sales limits for mail-order sales.
1314.105 Verification of identity for mail-order sales.
1314.110 Reports for mail-order sales.
1314.115 Distributions not subject to reporting requirements.
Subpart D--Order To Show Cause
1314.150 Order to show cause.
1314.155 Suspension pending final order.

    Authority: 21 U.S.C. 802, 830, 842, 871(b), 875, 877.

Subpart A--General


Sec.  1314.01  Scope.

    This part specifies the requirements for retail sales of scheduled 
listed chemical products to individuals for personal use.


Sec.  1314.02  Applicability.

    (a) This part applies to the following regulated persons who sell 
scheduled listed chemical products for personal use:
    (1) Regulated sellers of scheduled listed chemical products sold at 
retail for personal use through face-to-face sales at stores or mobile 
retail vendors.
    (2) Regulated persons who engage in a transaction with a non-
regulated person and who ship the products to the non-regulated person 
by the U.S. Postal Service or by private or common carriers.
    (b) The requirements in subpart A apply to all regulated persons 
subject to this part. The requirements in subpart B apply to regulated 
sellers as defined in

[[Page 56025]]

Sec.  1300.02 of this chapter. The requirements in subpart C apply to 
regulated persons who ship the products to the customer by the U.S. 
Postal Service or by private or common carriers.


Sec.  1314.03  Definitions.

    As used in this part, the term ``mail-order sale'' means a retail 
sale of scheduled listed chemical products for personal use where a 
regulated person uses or attempts to use the U.S. Postal Service or any 
private or commercial carrier to deliver the product to the customer. 
Mail-order sale includes purchase orders submitted by phone, mail, fax, 
Internet, or any method other than face-to-face transaction.


Sec.  1314.05  Requirements regarding packaging of nonliquid forms.

    A regulated seller or mail order distributor may not sell a 
scheduled listed chemical product in nonliquid form (including gel 
caps) unless the product is packaged either in blister packs, with each 
blister containing no more than two dosage units or, if blister packs 
are technically infeasible, in unit dose packets or pouches.


Sec.  1314.10  Effect on State laws.

    Nothing in this part preempts State law on the same subject matter 
unless there is a positive conflict between this part and a State law 
so that the two cannot consistently stand together.


Sec.  1314.15  Loss reporting.

    (a) Each regulated person must report to the Special Agent in 
Charge of the DEA Divisional Office for the area in which the regulated 
person making the report is located, any unusual or excessive loss or 
disappearance of a scheduled listed chemical product under the control 
of the regulated person. The regulated person responsible for reporting 
a loss in-transit is the supplier.
    (b) Each report submitted under paragraph (a) of this section must, 
whenever possible, be made orally to the DEA Divisional Office for the 
area in which the regulated person making the report is located at the 
earliest practicable opportunity after the regulated person becomes 
aware of the circumstances involved.
    (c) Written reports of losses must be filed within 15 days after 
the regulated person becomes aware of the circumstances of the event.
    (d) A report submitted under this section must include a 
description of the circumstances of the loss (in-transit, theft from 
premises, etc.).
    (e) A suggested format for the report is provided below:

Regulated Person

Registration number (if applicable)-----------------------------
Name------------------------------------------------------------
Business address------------------------------------------------
City------------------------------------------------------------
State-----------------------------------------------------------
Zip-------------------------------------------------------------
Business phone--------------------------------------------------
Date of loss----------------------------------------------------
Type of loss----------------------------------------------------
Description of circumstances------------------------------------

Subpart B--Sales by Regulated Sellers


Sec.  1314.20  Restrictions on sales quantity.

    (a) Without regard to the number of transactions, a regulated 
seller (including a mobile retail vendor) may not in a single calendar 
day sell any purchaser more than 3.6 grams of ephedrine base, 3.6 grams 
of pseudoephedrine base, or 3.6 grams of phenylpropanolamine base in 
scheduled listed chemical products.
    (b) A mobile retail vendor may not in any 30-day period sell an 
individual purchaser more than 7.5 grams of ephedrine base, 7.5 grams 
of pseudoephedrine base, or 7.5 grams of phenylpropanolamine base in 
scheduled listed chemical products.


Sec.  1314.25  Requirements for retail transactions.

    (a) Each regulated seller must ensure that sales of a scheduled 
listed chemical product at retail are made in accordance with this 
section and Sec.  1314.20.
    (b) The regulated seller must place the product so that customers 
do not have direct access to the product before the sale is made (in 
this paragraph referred to as ``behind-the-counter'' placement). For 
purposes of this paragraph, a behind-the-counter placement of a product 
includes circumstances in which the product is stored in a locked 
cabinet that is located in an area of the facility where customers do 
have direct access. Mobile retail vendors must place the product in a 
locked cabinet.
    (c) The regulated seller must deliver the product directly into the 
custody of the purchaser.


Sec.  1314.30  Recordkeeping for retail transactions.

    (a)(1) Except for purchase by an individual of a single sales 
package containing not more than 60 milligrams of pseudoephedrine, the 
regulated seller must maintain, in accordance with criteria issued by 
the Administrator, a written or electronic list of each scheduled 
listed chemical product sale that identifies the products by name, the 
quantity sold, the names and addresses of the purchasers, and the dates 
and times of the sales (referred to as the ``logbook''). The logbook 
may be maintained on paper or in electronic form.
    (2) Effective November 27, 2006, if a logbook is maintained on 
paper, it must be created and maintained in a bound record book.
    (b) The regulated seller must not sell a scheduled listed chemical 
product at retail unless the purchaser does the following:
    (1) Presents an identification card that provides a photograph and 
is issued by a State or the Federal Government, or a document that, 
with respect to identification, is considered acceptable for purposes 
of 8 CFR 274a.2(b)(1)(v)(A) and 274a.2(b)(1)(v)(B).
    (2) Signs the logbook and enters in the logbook his or her name, 
address, and the date and time of the sale.
    (c) For records created electronically, the regulated seller may 
use an electronic signature system to capture the signature and may 
have the computer automatically enter the date and time of the sale. 
The regulated seller may ask the purchaser for their name and address 
and enter information if it is not feasible for the purchaser to enter 
the information electronically.
    (d) The regulated seller must determine that the name entered in 
the logbook corresponds to the name provided on identification 
presented and that the date and time entered are correct.
    (e) The regulated seller must enter in the logbook the name of the 
product and the quantity sold. Examples of methods of recording the 
quantity sold include the weight of the product per package and number 
of packages of each chemical, the cumulative weight of the product for 
each chemical, or quantity of product by Universal Product Code. These 
examples do not exclude other methods of displaying the quantity sold. 
For electronic records, the regulated seller may use a point-of-sale 
and bar code reader. Such electronic records must be provided pursuant 
to paragraph (i) of this section in a human readable form such that the 
requirements of paragraph (a)(1) of this section are satisfied.
    (f) The regulated seller must include in the logbook or display by 
the logbook, the following notice:

    Warning: Section 1001 of Title 18, United States Code, states 
that whoever, with respect to the logbook, knowingly and willfully 
falsifies, conceals, or covers up by any trick, scheme, or device a 
material fact, or makes any materially false, fictitious, or 
fraudulent statement or representation, or makes or uses any false 
writing or document knowing the same to contain any materially 
false, fictitious, or fraudulent statement or entry, shall be fined 
not more than $250,000 if an

[[Page 56026]]

individual or $500,000 if an organization, imprisoned not more than 
five years, or both.

    (g) The regulated seller must maintain each entry in the logbook 
for not fewer than 2 years after the date on which the entry is made.
    (h) A record under this section must be kept at the regulated 
seller's place of business where the transaction occurred, except that 
records may be kept at a single, central location of the regulated 
seller if the regulated seller has notified the Administration of the 
intention to do so. Written notification must be submitted by 
registered or certified mail, return receipt requested, to the Special 
Agent in Charge of the DEA Divisional Office for the area in which the 
records are required to be kept.
    (i) The records required to be kept under this section must be 
readily retrievable and available for inspection and copying by 
authorized employees of the Administration under the provisions of 21 
U.S.C. 880.
    (j) A record developed and maintained to comply with a State law 
may be used to meet the requirements of this section if the record 
includes the information specified in this section.


Sec.  1314.35  Training of sales personnel.

    Each regulated seller must ensure that its sales of a scheduled 
listed chemical product at retail are made in accordance with the 
following:
    (a) In the case of individuals who are responsible for delivering 
the products into the custody of purchasers or who deal directly with 
purchasers by obtaining payments for the products, the regulated seller 
has submitted to the Administration a self-certification that all such 
individuals have, in accordance with criteria issued by the 
Administration, undergone training provided by the regulated seller to 
ensure that the individuals understand the requirements that apply 
under this part.
    (b) The regulated seller maintains a copy of each self-
certification and all records demonstrating that individuals referred 
to in paragraph (a) of this section have undergone the training.


Sec.  1314.40  Self-certification.

    (a) A regulated seller must submit to the Administration the self-
certification referred to in Sec.  1314.35(a) in order to sell any 
scheduled listed chemical product. The certification is not effective 
for purposes of this section unless, in addition to provisions 
regarding the training of individuals referred to in Sec.  1314.35(a), 
the certification includes a statement that the regulated seller 
understands each of the requirements that apply under this part and 
agrees to comply with the requirements.
    (b) When a regulated seller files the initial self-certification, 
the Administration will assign the regulated seller to one of twelve 
groups. The expiration date of the self-certification for all regulated 
sellers in any group will be the last day of the month designated for 
that group. In assigning a regulated seller to a group, the 
Administration may select a group with an expiration date that is not 
less than 12 months or more than 23 months from the date of the self-
certification. After the initial certification period, the regulated 
seller must update the self-certifications annually.
    (c) The regulated seller must provide a separate certification for 
each place of business at which the regulated seller sells scheduled 
listed chemical products at retail.


Sec.  1314.45  Privacy protections.

    To protect the privacy of individuals who purchase scheduled listed 
chemical products, the disclosure of information in logbooks under 
Sec.  1314.15 is restricted as follows:
    (a) The information shall be disclosed as appropriate to the 
Administration and to State and local law enforcement agencies.
    (b) The information in the logbooks shall not be accessed, used, or 
shared for any purpose other than to ensure compliance with this title 
or to facilitate a product recall to protect public health and safety.
    (c) A regulated seller who in good faith releases information in a 
logbook to Federal, State, or local law enforcement authorities is 
immune from civil liability for the release unless the release 
constitutes gross negligence or intentional, wanton, or willful 
misconduct.


Sec.  1314.50  Employment measures.

    A regulated seller may take reasonable measures to guard against 
employing individuals who may present a risk with respect to the theft 
and diversion of scheduled listed chemical products, which may include, 
notwithstanding State law, asking applicants for employment whether 
they have been convicted of any crime involving or related to such 
products or controlled substances.

Subpart C--Mail-Order Sales


Sec.  1314.100  Sales limits for mail-order sales.

    (a) Each regulated person who makes a sale at retail of a scheduled 
listed chemical product and is required under Sec.  1310.03(c) of this 
chapter to submit a report of the sales transaction to the 
Administration may not in a single calendar day sell to any purchaser 
more than 3.6 grams of ephedrine base, 3.6 grams of pseudoephedrine 
base, or 3.6 grams of phenylpropanolamine base in scheduled listed 
chemical products.
    (b) Each regulated person who makes a sale at retail of a scheduled 
listed chemical product and is required under Sec.  1310.03(c) of this 
chapter to submit a report of the sales transaction to the 
Administration may not in any 30-day period sell to an individual 
purchaser more than 7.5 grams of ephedrine base, 7.5 grams of 
pseudoephedrine base, or 7.5 grams of phenylpropanolamine base in 
scheduled listed chemical products.


Sec.  1314.105  Verification of identity for mail-order sales.

    (a) Each regulated person who makes a sale at retail of a scheduled 
listed chemical product and is required under Sec.  1310.03(c) of this 
chapter to submit a report of the sales transaction to the 
Administration must, prior to shipping the product, receive from the 
purchaser a copy of an identification card that provides a photograph 
and is issued by a State or the Federal Government, or a document that, 
with respect to identification, is considered acceptable for purposes 
of 8 CFR 274a.2(b)(1)(v)(A) and 274a.2(b)(1)(v)(B). Prior to shipping 
the product, the regulated person must determine that the name and 
address on the identification correspond to the name and address 
provided by the purchaser as part of the sales transaction. If the 
regulated person cannot verify the identities of both the purchaser and 
the recipient, the person may not ship the scheduled listed chemical 
product.
    (b) If the product is being shipped to a third party, the regulated 
person must comply with the requirements of paragraph (a) to verify 
that both the purchaser and the person to whom the product is being 
shipped live at the addresses provided. If the regulated person cannot 
verify the identities of both the purchaser and the recipient, the 
person may not ship the scheduled listed chemical product.


Sec.  1314.110  Reports for mail-order sales.

    (a) Each regulated person required to report under Sec.  1310.03(c) 
of this chapter must either:
    (1) Submit a written report, containing the information set forth 
in paragraph (b) of this section, on or before the 15th day of each 
month following the month in which the distributions took place. The 
report must be submitted under company

[[Page 56027]]

letterhead, signed by the person authorized to sign on behalf of the 
regulated seller, to the Drug and Chemical Evaluation Section, Office 
of Diversion Control, Drug Enforcement Administration, Washington, DC 
20537; or
    (2) Upon request to and approval by the Administration, submit the 
report in electronic form, either via computer disk or direct 
electronic data transmission, in such form as the Administration shall 
direct. Requests to submit reports in electronic form should be 
submitted to the Drug and Chemical Evaluation Section, Office of 
Diversion Control, Drug Enforcement Administration, Washington, DC 
20537, ATTN: Electronic Reporting.
    (b) Each monthly report must provide the following information for 
each distribution:
    (1) Supplier name and registration number;
    (2) Purchaser's name and address;
    (3) Name/address shipped to (if different from purchaser's name/
address);
    (4) Method used to verify the identity of the purchaser and, where 
applicable, person to whom product is shipped;
    (5) Name of the chemical contained in the scheduled listed chemical 
product and total quantity shipped (e.g. pseudoephedrine, 3 grams);
    (6) Date of shipment;
    (7) Product name;
    (8) Dosage form (e.g., tablet, liquid);
    (9) Dosage strength (e.g., 30mg, 60mg, per dose etc.);
    (10) Number of dosage units (e.g., 100 doses per package);
    (11) Package type (blister pack, etc.);
    (12) Number of packages;
    (13) Lot number.


Sec.  1314.115  Distributions not subject to reporting requirements.

    (a) The following distributions to nonregulated persons are not 
subject to the reporting requirements in Sec.  1314.110:
    (1) Distributions of sample packages when those packages contain 
not more than two solid dosage units or the equivalent of two dosage 
units in liquid form, not to exceed 10 milliliters of liquid per 
package, and not more than one package is distributed to an individual 
or residential address in any 30-day period.
    (2) Distributions by retail distributors that may not include face-
to-face transactions to the extent that such distributions are 
consistent with the activities authorized for a retail distributor as 
specified in Sec.  1300.02(b)(29) of this chapter, except that this 
paragraph (a)(2) does not apply to sales of scheduled listed chemical 
products at retail.
    (3) Distributions to a resident of a long term care facility or 
distributions to a long term care facility for dispensing to or for use 
by a resident of that facility.
    (4) Distributions in accordance with a valid prescription.
    (b) The Administrator may revoke any or all of the exemptions 
listed in paragraph (a) of this section for an individual regulated 
person if the Administrator finds that drug products distributed by the 
regulated person are being used in violation of the regulations in this 
chapter or the Controlled Substances Act.

Subpart D--Order to Show Cause


Sec.  1314.150  Order To show cause.

    (a) If, upon information gathered by the Administration regarding 
any regulated seller or a distributor required to submit reports under 
Sec.  1310.03(c) of this chapter, the Administrator determines that a 
regulated seller or distributor required to submit reports under Sec.  
1310.03(c) of this chapter has sold a scheduled listed chemical product 
in violation of Section 402 of the Act (21 U.S.C. 842(a)(12) or (13)), 
the Administrator will serve upon the regulated seller or distributor 
an order to show cause why the regulated seller or distributor should 
not be prohibited from selling scheduled listed chemical products.
    (b) The order to show cause shall call upon the regulated seller or 
distributor to appear before the Administrator at a time and place 
stated in the order, which shall not be less than 30 days after the 
date of receipt of the order. The order to show cause shall also 
contain a statement of the legal basis for such hearing and for the 
prohibition and a summary of the matters of fact and law asserted.
    (c) Upon receipt of an order to show cause, the regulated seller or 
distributor must, if he desires a hearing, file a request for a hearing 
as specified in subpart D of part 1316 of this chapter. If a hearing is 
requested, the Administrator shall hold a hearing at the time and place 
stated in the order, as provided in part 1316 of this chapter.
    (d) When authorized by the Administrator, any agent of the 
Administration may serve the order to show cause.


Sec.  1314.155  Suspension pending final order.

    (a) The Administrator may suspend the right to sell scheduled 
listed chemical products simultaneously with, or at any time subsequent 
to, the service upon the seller or distributor required to file reports 
under Sec.  1310.03(c) of this chapter of an order to show cause why 
the regulated seller or distributor should not be prohibited from 
selling scheduled listed chemical products, in any case where he finds 
that there is an imminent danger to the public health or safety. If the 
Administrator so suspends, he shall serve with the order to show cause 
under Sec.  1314.150 an order of immediate suspension that shall 
contain a statement of his findings regarding the danger to public 
health or safety.
    (b) Upon service of the order of immediate suspension, the 
regulated seller or distributor shall, as instructed by the 
Administrator:
    (1) Deliver to the nearest office of the Administration or to 
authorized agents of the Administration all of the scheduled listed 
chemical products in his or her possession; or
    (2) Place all of the scheduled listed chemical products under seal 
as described in Section 304 of the Act (21 U.S.C. 824(f)).
    (c) Any suspension shall continue in effect until the conclusion of 
all proceedings upon the prohibition, including any judicial review, 
unless sooner withdrawn by the Administrator or dissolved by a court of 
competent jurisdiction. Any regulated seller or distributor whose right 
to sell scheduled listed chemical products is suspended under this 
section may request a hearing on the suspension at a time earlier than 
specified in the order to show cause under Sec.  1314.150, which 
request shall be granted by the Administrator, who shall fix a date for 
such hearing as early as reasonably possible.

    Dated: September 20, 2006.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. 06-8194 Filed 9-21-06; 10:25 am]
BILLING CODE 4410-09-P


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